Sentinel’s Loan Book Reaches $1/4 billion
31 July 2007
Sentinel’s Loan Book Reaches $1/4 billion, As Seniors Refuse to Shift
“We shall not be moved!” says the song in a new TVC campaign to be launched this week by Sentinel, reflecting a vote by senior New Zealanders to stay in their own homes after retirement.
Last month Sentinel’s loan book hit $250 million. The company is solely focused on home equity release products. This following a doubling of its loan book in 2006 (at $176 million) over 2005. Sentinel believes its success only four years after establishment is due to a preference shift by many New Zealanders not to ‘sell down’.
“All our research shows that people want to remain independent in their senior years,” says Chief Executive of Sentinel, Vaughan Underwood. “New Zealanders past retirement age are telling us they don’t want to be a burden on friends or family. Most have worked hard, done without and ‘got there’. Now, they want to use their own money, invested in their own homes, to take care of themselves in the last part of their lives, supplementing whatever pension they have.”
The TVC campaign depicts people declining to sell their houses. Signs on the front lawn of the houses say ‘not for sale’, while a new recording of the old gospel song ‘We Shall Not Be Moved’ plays in the background. To see the ad: Visit www.sentinel.net.nz Look under “Press Releases” then August 2007 Campaign. Password is Media: Login is Media
“The campaign captures the flavour of what we’ve encountered in our customers,” says Mr Underwood.
The ‘stay at homes’ in New Zealand are part
of an international phenomenon. A story over the weekend
said that Scottish home equity release schemes had rocketed
233% in the past 12 months, and gave reasons for older
people’s preferences to stay in their own homes.
(see http://scotlandonsunday.scotsman.com/business.cfm?id=1180692007). The Safe Home Equity Release (SHIP), the UK association which covers 90% of UK organisations offering home equity release, reported their members wrote over a billion pounds in home equity release products in the past 12 months and the number of loans taken out was 11% up in the six months to mid 2007 over the same period in 2006. (see http://www.citywire.co.uk/News/NewsArticle.aspx?VersionID=94777&MenuKey=News.Home)
Mr Underwood says that even selling down is not the choice of many people in New Zealand.
“Some need a home equity release to maintain their houses, have an operation or improve the quality of their lives. Some are choosing to stay in their own homes until they die, while others are taking a home equity release loan so they can stay a few years longer,” he says.
Sentinel is New Zealand’s largest home equity release company and provides loans to senior New Zealanders, allowing them to borrow against the equity in their houses after aged 60 without regular repayment if required.
Sentinel is a member of New Zealand voluntary industry association SHERPA (www.sherpa.org.nz) [Safe Home Equity Release Plans Association] which has a code of practice aligned with European consumer protection models, to help ensure customers are well informed on home equity release.
A home equity release loan may not suit everyone – but it is the considered choice of more and more New Zealanders, and many thousands of people offshore.
A Sentinel loan is secured against a customer’s house and does not require any regular repayments to be made. The amount able to be borrowed increases with the customer’s age rising to 45% of the home’s value at aged 90. Interest is applied to the loan and accumulates monthly. The full value of the loan may be repaid at any time, and is repayable when the last resident moves permanently from the home – usually when they pass away or move to permanent care.
On average most borrowers take out less than 15% of the value of their homes; assuming absolutely no inflation of house prices over the following 14 years (a situation that has never occurred in New Zealand) the 15% initial loan would grow to only 60% of the value in the timeframe.
All Sentinel lifetime loan clients are offered a projection of the loan’s size based upon the value of their home, the amount they are borrowing, and the projected value of their home in 20 years – on a conservative projection basis of increase in value of their home annually of 3% and 7%.