Ageing population behind reverse mortgage rise, says Heartland

An ageing demographic in New Zealand is contributing to a rise in equity release products, according to Jeff Greenslade, the chief executive of Heartland Bank, after the lender noted a sharp rise in reverse mortgages in the six months to December.

Greenslade, speaking after Heartland’s half year update to the NZX, said retirement-age customers were increasingly turning to reverse mortgages to boost income, amid a growing awareness of the products: “The growth we’re getting is demographically driven. It is the ageing population, with most of their wealth tied up in the house and cashflow poor. Reverse mortgages are the ideal means for managing their retirement.”

Heartland said net operating income from reverse mortgages grew by $3.7m to $18m in the six months to December, up 26% from the same period in 2016. Heartland said much of the growth came from Australia, but net receivables in New Zealand reverse mortgages grew by $24.3m to $429.6m over the six month period.

It comes as Heartland booked a post-tax profit of $31.3m in the half year, an increase of 7% on the same period in 2016. The lender recorded a 10.8% return on earnings, slightly down from 11.6% in the same period in 2016.