Retirement Commission backs home equity release with advice

Around 25% of older households who have low retirement income and savings, but high levels of equity in their home. In general they are more likely to be older (75+), non-Māori, and no longer in paid employment.

The report says there is evidence that people are finding it difficult to downsize into smaller homes due to a lack of appropriate properties. On average these households have home equity of just over $600,000, which can potentially be released to supplement retirement income.

However, home equity release products - reverse mortgages and home reversions - are not well understood here due to the complexity and costs involved.

Retirement Commission policy lead, Dr Michelle Reyers says while NZ home equity release products appear to be costlier than in larger markets, they can provide an alternative source of income, less costly, than other forms of lending.