Lender Rides Reverse Mortgage Success in Australia, New Zealand

Reverse mortgage lender Heartland Bank recently reported strong results across Oceania, with double-digit growth in both its Australia and New Zealand operations.

The New Zealand-based Heartland saw 31% growth in net receivables related to reverse mortgages in Australia during the 12 months ended this past June, according to financial publication Interest, along with a 12% gain in its New Zealand reverse mortgage business.

Those sunny results come as Heartland prepares a major restructuring that will free the company from certain capital requirements in Australia, Interest reported.

“I think we are leading the industry in terms of our approach and conduct,” Heartland CFO David Mackrell told the publication. “So we’re not concerned about regulation at all, and comfortable that any regulation that comes along that’s reasonable is fine.”

The lender last year rolled out a monthly-advance option after seeing explosive growth: Between 2015 and 2016, Heartland’s reverse mortgage book value jumped from $28 million to $365 million. Unlike in the United States, New Zealand borrowers tend to use the products as a kind of bridge loan between home ownership and moving to a retirement community, with a median term of only eight years.

As in Canada and the United Kingdom, reverse mortgages have been growing in popularity down under, with the Australian government earlier this year proposing a universal plan that would see homeowners access up to $11,799 per year for the remainder of their lives.

“Typically, older homeowners have been reluctant to sell for both sentimental and financial reasons,” Australian housing publication Domain reported last year. “Often selling property is costly, and funds left over after buying a smaller home  could then be considered in the means test.”

Written by Alex Spanko

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