Bluestone Reverse Mortgage Recommended by Consumer

News release
Issued: 9 August 2007

Bluestone’s Reverse Mortgage Recommended by Consumer Magazine

Bluestone is pleased to announce its reverse mortgage product as one of only two recommended by Consumer Magazine’s recent investigation into the Home Equity Release market.

The August edition of Consumer Magazine examines reverse mortgages on offer in New Zealand and “strongly recommends” that people taking out a reverse mortgage only take out one with an unconditional no-negative equity guarantee. Consumer Magazine identifies Bluestone as being one of only two companies with an unconditional guarantee.

So what does this mean? Put simply it means people who take out a reverse mortgage will never owe more than the value of their house, irrespective of what happens to property prices in the future, or whether all the terms and conditions of the loan have been strictly met. Customers are also guaranteed the right to reside in their property for as long as they choose.

Reverse mortgages enable people, often retirees, to borrow money against the value of their house. When the house is later sold, the mortgage is repaid.

Reverse mortgages are the most popular form of equity release for seniors in New Zealand and in similar countries such as Australia, the UK, Canada and the US and allow people to unlock the wealth tied up in their residential property for use in retirement whilst allowing people to stay in their own homes.

Reverse mortgages can be used for home maintenance, the purchase of a new car, travel and to supplement retirement income. Assisting family members and paying off other debts are also common uses.

Traditionally, there is some apprehension around reverse mortgages with consumers fearing they may be left with negative equity in their home.

However, as Consumer Magazine points out in an investigation into the reverse mortgage market, Bluestone is one of only two companies that has no conditions on its no-negative equity guarantee.

Bluestone executive general manager Terry Zouch says Bluestone is delighted to be recognised as an industry leader in such an important consumer publication.

“Bluestone prides itself on going the extra mile with our products and offers the widest range of drawdown flexibility combined with long term interest rate protection. Retirees are being targeted by cosy looking marketing campaigns, but we feel it is important to look at the substance of the product offering; how secure is it, and what could happen over the longer term?

“With a rapidly growing 60-plus population, low levels of retirement savings and a large amount of illiquid wealth tied up in housing, a reverse mortgage is an attractive option for many New Zealanders,” Mr Zouch concluded.

ENDS

Notes to editors:

A reverse mortgage is a loan secured against a borrower’s property who then retains full ownership of the property. Funds can be released either as a single lump sum, as a series of regular instalments or a combination of the two.

Interest and fees are added to the loan balance, which increases over time and is repaid when the property is either sold or permanently vacated by all borrowers. This will typically happen when the borrower dies or moves into long term-aged care.

Bluestone is a member of SHERPA – the Safe Home Equity Release Plans Association. Bluestone strongly supports SHERPA and its work. It is a not-for-profit self-regulatory industry association dedicated to the protection of plan-holders and the promotion of safe home equity release plans. Bluestone’s decision to voluntarily take up membership of SHERPA demonstrates our company’s commitment to protecting the interests of Seniors.

About Bluestone Group

Bluestone Group was established in Australia in 2000 and New Zealand on 2002 respectively to provide specialist home loan products. The Group specialises in residential property loans and reverse mortgages to retirees. The business is backed by a number of large financial services groups including Dutch bank, ABN AMRO, UK-based fund manager, Cambridge Place Investment Management, Barclays Bank, and senior management and is funded in New Zealand by Westpac Institutional Bank.. To date, Bluestone has provided over $4.6 billion (AU$4 billion) of home loans to more than 20,000 Australians and New Zealanders. Visit our web site at www.bluestone.net.nz

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