Media Reporting

Disclaimer:

The following links provide access to a range of Media Reporting from a wide range of Media Sources. 

SEQUAL provides this material on an information basis only. Whilst every effort is made to ensure that this material is accurate, SEQUAL does not accept responsibility for any error or omission. This material should not be relied upon as a basis for any financing or investment decision.

New Figures Highlight the Need for Reform of the Aged Care Sector

LABOR is under mounting pressure to overhaul the nation's aged care system as new figures reveal huge unmet demand for places.

The latest aged care approvals round reveals nursing home providers are refusing to take up new bed licences, while the government has provided just 1724 of the 24,000 community care places sought by the industry.

Minister for Ageing Mark Butler said structural reform was needed, as the aged care sector today demanded funds in the upcoming federal budget to begin the process.

Nursing home providers took up just 7933 of the 10,493 residential aged care places on offer from the government, as they struggle under a system that fails to provide sufficient capital funding.

“This means that not enough beds are being built today for the increasing number of older Australians tomorrow,” Mr Butler said.

Source:The Australian - 22 December 2011
Journalist: Ben Packham

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Where to Find Financial Help for Aged Care

If a dependent or a spouse continues to live in the family home, you won’t be able to rely on the proceeds of a house sale to fund an accommodation bond and will have to look for funding elsewhere.

It may be that children can help pay the accommodation bond – with a view to recouping the money down the track either from the eventual sale of the home or the return of the bond.

Pensions safe

The good news is that children can make regular or irregular gifts of money to a parent on a pension without affecting their parent’s pension payments.

Louise Biti, director of Strategy Steps which specialises in financial planning strategies, says the proviso is that the money must be spent.

If the money is paid into a bank account and it sits there for longer than a fortnight, Centrelink needs to be advised of the change to the bank balance and the payments will be included as an assessable asset and subject to deeming. This can affect the pension.

Source: Smart: Smart Investor - 16 December 2011
Author: Bina Brown

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SHIP Shapes up to Widen its Role Across Sector

Safe Home Income Plans, the UK's trade body for equity release providers, has widened its remit to represent the entire sector, its director general has announced.

Andrea Rozario revealed that Ship would no longer just be the voice of equity release providers, but would lobby on behalf of the entire sector, including providers, solicitors, advisers and other key stakeholders.

She said the decision was taken following an extensive engagement process with all sectors of the equity release industry.

Ms Rozario added: “We have listened to what you have said and now the time is right for change. We will no longer simply be the voice of equity release providers working with the rest of the sector, but a united industry body that represents the whole industry fully and puts the needs of the customer first.

About SHIP
Safe Home Income Plans (SHIP) was launched in 1991 in the UK in direct response to the growing need for consumer protection. SHIP represents the majority of the equity release market in the UK in terms of volume and its members include the leading providers of lifetime mortgages and home reversion plans.

Source:  Financial Adviser - 8 December 2011
Journalist: Julie Bradshaw

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SHIP Equity Release Figures Lending

“This has been an excellent quarter for the equity release market. Considering the wealth locked up in a property as part of general financial or retirement planning is essential, as it will continue to be the greatest asset most people have as they approach retirement. We feel that breaking the psychologically important £200 million barrier for new advances in Q3 is fantastic news for an industry that is recognized to have a huge latent demand.”

“While it is unlikely that we will see an immediate return to business levels recorded prior to the recession, we are confident that the market has started to turn a corner and we will return to more typical trading conditions.  The UK population is ageing and with insufficient pension provision and the prospect of meeting significant care costs, we expect the demand for equity release products to increase significantly over the next few years.”

About SHIP
Safe Home Income Plans (SHIP) was launched in 1991 in the UK in direct response to the growing need for consumer protection. SHIP represents the majority of the equity release market in the UK in terms of volume and its members include the leading providers of lifetime mortgages and home reversion plans.

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Productivity Commission Aimed to Fee Up the Supply of Aged Care Minister for Mental Health and Ageing

The Minister for Mental Health and Ageing The Hon. Mark Butler stated that the average bond, at the moment, for moving into residential aged care is about $264,000, ranging up to $2.6 million. He said they wanted to move away from the bond system to fortnightly, or monthly, payments either using people’s homes in a reverse mortgage or possibly their superannuation.

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Equity Release Sector Leads from The Front

These days it’s rare to read articles about equity release which talk about the flawed schemes that existed in the late 1980s.

Much credit needs to be given to trade body Safe Home Income Plans for embedding no negative equity guarantees into all plans that adhere to its code.

It’s almost taken for granted that these plans give applicants the freedom to move home in the future. The independent solicitor certificate has also done much to protect clients and brokers.

Not all countries can boast this level of protection however. Australia, while following many of the SHIP standards via its Senior Australians Equity Release Association of Lenders, has a more fragmented market where nearly half of the lenders do not subscribe to the standards.

The result, either directly or indirectly, is a new piece of legislation that is going through the Australian parliament now. This is to amend consumer credit laws to enhance disclosure and most importantly to insist on a no negative equity guarantee.

Editors Note:

The SEQUAL Chief Executive Kevin Conlon asserts in fact the vast majority of active Equity Release providers in Australia are members of the peak trade body, SEQUAL.  Conlon said "As the Chief Executive of SEQUAL, I am proud of our contribution towards an ethical and efficient market in this country.

We have worked closely with Government to ensure that the market was not burdened with unnecessary regulation and are pleased that SEQUAL's self-regulatory initiatives have now been uplifted into legislation."

The Australian Assistant Treasurer recently had to say...

"Development of the reverse mortgage reforms has been assisted by the mature and constructive approach taken by the reverse mortgage industry and its peak body, SEQUAL," Mr Shorten said.

"The reverse mortgage industry anticipated the need for consumer protections and acted by introducing a robust industry code – some aspects of which are reflected in our legislation."

Read Full Article and SEQUAL CEO's Response 

Top Position Within Reach

It might not feel like it to retirees who are in the trenches battling the ravages of the global financial crisis but Australia's retirement income system is one of the best in the world. Second-best, in fact, according to a global survey released last night.

Australia clawed its way back from fourth place last year to finish behind the Netherlands thanks to a real increase in the age pension and higher household savings, says author of the Melbourne Mercer Global Pension Index, David Knox.

The present base rate of the age pension is $689 a fortnight for singles and $519 each for couples, after a one-off $30 boost and cost-of-living increases. At the same time, household savings increased to 9 per cent of net income from 4 per cent last year.

Our savings rate is now similar to France, Germany, Switzerland and even Singapore. India and China save the most, due in part to the lack of a comprehensive pension system. In Britain, household savings were down to 3 per cent.

''We are back to the level of savings we had in the 1970s - in the '90s and noughties we had negative savings while we were on a spending binge'', says Knox, a senior partner at Mercer.

SEQUAL Welcomes Bill Shorten's Approach

An equity release industry body has praised the Assistant Treasurer and Minister for Financial Services Bill Shorten's consultative approach before introducing changes to reverse mortgage regulation as part of the Government's new credit consumer protections.

Chief executive of Senior Australians Equity Release Lenders Association (SEQUAL), Kevin Conlon, said the Government had been willing to take the existing standards of practice within the Australian equity release industry into account.

The new Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 includes a statutory no negative equity guarantee for reverse mortgages and additional disclosure requirements "to ensure consumers can use reverse mortgages with confidence".

"This has been a very good example of effective consultation between government and industry which has resulted in good outcomes for consumers," Conlon said.

Source: Money Management - 27 September 2011
Journalist: Milana Pokrajac

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Housing the Key to Good Ageing Policy

An expert in the field identifies the links between housing and ageing.

Australia's high-level of home ownership must be sustained while the supply of affordable rental properties should be ramped up. There needs to better housing choices for older Australians, along with a focus on building age-friendly housing and neighbourhoods. A facility to utilise housing equity is also needed.

These are the five central issues that society must face in order to effectively house older Australians, according to a housing policy researcher and expert.

Australian Housing and Urban Research Institute (AHURI) director, Andrew Jones said housing was fundamental to the well-being of older Australians.

The importance of the final challenge of facilitating housing equity has been acknowledged by the PC with recommendations for the savings and home credit schemes. Most people, especially the baby boomers, held a lot of their wealth in their home Jones told the conference.

"There's evidence that older people are increasingly willing to consider using their housing equity to fund later life... Then there is the view that we need to use housing equity to meet the costs of ageing for some households and for society overall."

Jones said one approach to utilising home equity, downsizing, would require sufficient places for older people to move to. And the other, reverse mortgage, needed to be addressed as it was presently limited in Australia.

Jones told delegates the other challenge that underpinned these five was "to put housing at the centre or certainly more at the centre of the policy response to population ageing".

More than just shelter, Jones said housing affected many other aspect of ageing as well and had been shown to reduce demand on health services, enable delivery of community care, facilitate social participation and supplement retirement incomes.

Source: Aged Care INsite - 26 September 2011
Journalist: Natasha Egan

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Australian Home Equity Law Changes

All reverse mortgage and accommodation bond loan providers will now have to provide more detailed information about interest rates, the effect of compounding interest and estimates on total debts involved with a home equity-release product.

The changes are included in a Bill to amend consumer credit laws currently going through parliament.

"The Bill will introduce significant new protections for senior Australians and other consumers who are vulnerable to inappropriate lending practices,'' financial services and superannuation minister Bill Shorten said.

"Reverse mortgages are great for some people,'' Mr Shorten said. ``Sometimes seniors will have a lot of wealth in their home but not much income and the hassle of selling the house and moving is just too much.

Source: Daily Telegraph - 23 September 2011
Journalist: Karina Barrymore


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Reverse Mortgage Legislation Applauded

SEQUAL has praised the government initiative to regulate the reverse mortgage market

Assistant Treasurer Bill Shorten has introduced a bill into Parliament enshrining in law many elements of SEQUAL's code of conduct. The legislation includes a no negative equity guarantee, and clarifies disclosure requirements for brokers and lenders.

"I am pleased to say this approach is supported by industry and will result in consumers making more informed and empowered choices in balancing their current and future needs," Shorten told Parliament.

SEQUAL chief executive Kevin Conlon praised the legislation, and commended the government on its industry consultation process.

"This has been a very good example of effective consultation between government and industry which has resulted in meaningful outcomes for consumers," Conlon said.

Source: BrokerNews - 23 September 2011
Journalist: Ben Adam


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Senior Australians Win as Government Work with SEQUAL on Equity Release Regulations

SYDNEY, Thursday 22nd September 2011 – The peak equity release industry body (SEQUAL) has today acknowledged the considered approach taken by the Gillard Government in consulting with industry in order to ensure that new regulations will both protect consumers and preserve choices for Senior Australians facing the challenge of funding their retirement. 

Responding to the statements made yesterday by Assistant Treasurer Bill Shorten, the SEQUAL Chief Executive, Kevin Conlon confirmed that Government had been willing to take the existing high standards of practice within the Australian equity release industry into account in order to avoid an unnecessary regulatory burden on this rapidly growing market. “This has been a very good example of effective consultation between Government and industry which has resulted in meaningful outcomes for consumers”, he said.

Read Full Media Release 

New Consumer Credit Protection Introduced into Parliament

Better protections for senior Australians taking out reverse mortgages and vulnerable people who use payday loans are a step closer following the introduction of the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 in the House of Representatives.

In introducing the legislation, Assistant Treasurer Bill Shorten said "The Gillard Government is determined to protect vulnerable consumers from the potential dangers of accessing credit with hidden risks or excessive interest rates."

The Bill will introduce significant new protections for senior Australians and other consumers who are vulnerable to inappropriate lending practices, through reforms in four main categories: short-term loans, reverse mortgages, consumer leases and other enhancements to the operation of the National Consumer Credit Protection Act 2009.

For short-term loans, the Bill includes:

• A national cap on the reasonable costs that can be charged for small amount loans
• Ensuring loans can't be refinanced so that low-income consumers don't end up sinking further into debt
• Mandatory disclosure of the availability of other options, including Centrelink advances and no or low interest loans through community organisations.

For reverse mortgages, the Bill includes:

• A no-negative-equity guarantee for reverse mortgages, so seniors can't end up owing more to the lender than their home is worth
• Other protections and disclosure requirements to ensure consumers can use reverse mortgages with confidence.

"Development of the reverse mortgage reforms has been assisted by the mature and constructive approach taken by the reverse mortgage industry and its peak body, SEQUAL," Mr Shorten said.

"The reverse mortgage industry anticipated the need for consumer protections and acted by introducing a robust industry code – some aspects of which are reflected in our legislation." 

Read Full Media Release

A Slave to Love and Money?

The number of women older than 50 in the workforce is double what it was 20 years ago and the number of 60 to 64-year-olds has tripled.

So many are returning to the workforce at a time when they've usually already left.

Recent Australian Bureau of Statistics figures show the increase in the labour force over the past 10 years is basically from this older female group.

For many women, this trip back to work is out of financial necessity. They're bearing the brunt of a three-pronged attack on Baby Boomer finances:

*Not enough superannuation to maintain their desired retirement lifestyle.

*Having to support elderly parents who are asset rich but cash poor.

*If your partent are still living in their own home and are short of cash to live on, talk to the bank about options such as a reverse mortgage where they can turn assets into cashflow.

Get good advice on the consequences bu it's a better option than draining your super or bank accounts.

* Supporting adult children and their families.

Source: Herald Sun - 19 September 2011
Journalist: David & Libby Koch

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Make your Money Last Longer

The holy grail of retirement is making your money last at least as long as you do.  There are a small but growing number of income products that can help.

Reverse mortgages

More than $340 billion of wealth is tied up in home equity held by Australians aged 65-plus, according to Kevin Conlon, the chief executive of the industry body for the Australian equity-release market SEQUAL (Senior Australians Equity Release).

Reverse mortgages, or equity-release products, allow people to release the wealth they have tied up in their home. The individual agrees to mortgage a percentage of their home to the bank at an agreed rate and can receive that money as a lump sum or as periodic payments. The home is held as security in a non-recourse loan structure – so no repayments are required while the borrowers remain in their property.

A number of reverse mortgage services fell away during the global financial crisis as it became difficult for providers to obtain the finance to supply the product.

“They have no agreed maturity date [so] there’s a lot of uncertainty and it requires pretty substantial institutions to work in the equity release market,” Conlon says.

“I guess that’s a good thing.”

However, the funds in equity-release products now total $3 billion, with the average loan size close to $75,000.

Conlon says such products increasingly are used for one-offs such as home renovations or buying a car. Loan-to-value ratios depend on age, with the maximum at 65 being 15 per cent, rising to 40 per cent at 85.

Regulations surrounding equity-release products are expected to be tightened but Conlon hopes this won’t restrict provision of reverse mortgages too greatly.

Source: Financial Review - 31 August 2011
Journalist: Penny Pryor

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Locked Out Borrowers Getting Angry

Vast changes to the reverse mortgage market in tandem with the recent NCCP introduction is leaving a large pool of older borrowers without acces to funds.

Seniors First managing director Darren Moffatt said that since the global financial crisis, reverse mortgage lender numbers have contracted drastically, down from 21 prior to the crisis, to four major lenders at present, including St. George, CBA and Bankwest.

Moffatt said while the previous minimum age for equity release was 55, it has now also increased to 63, but mostly 65.

“The sector has really felt the brunt of the GFC; equity release requires capital to be tied up for a long time, so when capital became scarce, the sector was the first to feel the result of that," Moffatt said.

The result is that the expectations of many older borrowers for access to equity in their properties is often not being met, Moffatt said.

Editors Note:

The SEQUAL Chief Executive Kevin Conlon asserts that there is no rationing of reverse mortages in Australia.  Saying that "whilst the number of providers has reduced over recent years, the SEQUAL membership is comprised of strong financial institutions that are capable of and willing to meet current market demand".  However  Conlon has previously warned against imposing unnecessary regulatory burden on the Equity Release industry.  In July 2010 he said that:

""Equity Release is likely to emerge as a significant part of retirement funding and the current debate around advice and regulatory intervention needs to be carefully considered against that growing demand to ensure choices and legitimate strategies in retirement funding are not extinguished through unnecessary regulation".

Read Full Article: SEQUAL CEO Warns Against Heavy Handed Regulation

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Industry Code of Conduct Adequate Reverse Mortgage Industry should not overburden industry, industry participants say.

Commonwealth Bank of Australia (CBA) has warned against over-regulating the reverse mortgage industry, stating it supports government legislation as long as it is in line with the industry's existing guidelines.

"The bank welcomes the government legislating for the whole market and providing additional disclosures and protections similar to what the SEQUAL code of conduct already provides," a CBA spokeswoman said.

"For example, the code already has a 'no negative equity' requirement and information statements to assist consumers with understanding the specific characteristics of the product."

The spokeswoman's comments are in line with views expressed by Senior Australians Equity Release Association (SEQUAL) chief executive Kevin Conlon.

Conlon's comments come as the industry body prepares to submit its views on Assistant Treasurer Bill Shorten's draft legislation on the $3 billion reverse mortgage industry.

"There are some serious warnings there about ensuring that the regulations don't overburden an industry that has already demonstrated a track record of being ethical and efficient," Conlon said.

Source: Investor Daily - 22 August 2011
Journalist: Victoria Tait

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SEQUAL Warns Against Over-Regulation

CEO cites track record of ethical behaviour

SEQUAL has cautioned government against over-regulating the reverse mortgage industry in view of its track record of ethical behaviour, the industry body's chief executive said.

"There are some serious warnings there about ensuring that the regulations don't overburden an industry that has already demonstrated a track record of being ethical and efficient," Conlon told InvestorDaily.

Conlon was referring to Assistant Treasurer Bill Shorten's draft legislation, released on Monday, on the $3 billion reverse-mortgage market. 

"It reflects my prediction earlier in the year that we will see statutory protection uplifting the existing self-regulatory initiatives introduced by SEQUAL," he said.

"I refer specifically to the no-negative-equity guarantee and to the key facts document that is proposed."

Separately, the Productivity Commission's report on aged care, released earlier this week, suggested the government establish its own equity-release scheme.

"While this is an interesting suggestion, I think industry would probably see it as more appropriate for government to look at ways in which they can encourage greater competition in the equity-release market, rather than they themselves competing with a product," Conlon said.

Source: Investor Daily - 12 August 2011
Journalist:Victoria Tait

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Aged Care Provider BUPA Criticises Proposed Reform

BUPA Care Services, which runs 47 aged care homes, has attacked the Productivity Commission's proposed aged care reforms warning they could rob businesses of $10 billion in capital they need to build new beds.

And Julia Gillard has rejected the need for a boost in Australia's population growth to pay for the needs of retiring baby boomers, despite her concerns about the sustainability of the aged care sector.

A Productivity Commission report into aged care this week called for the introduction of a government backed reverse mortgage scheme and new pensioner savings accounts to allow the elderly to fund their aged care without affecting access to the age pension.

However, managing Director of BUPA Care Services Paul Gregersen says the current aged care funding system which relies on lump sum accommodation bonds and daily charges "works well" and he questions why the government would change it.

Source: The Australian - 9 August 2011
Journalist: Sue Dunlevy

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Fate of Homes To Stay a Concern for Aged

A Productivity Commission report released yesterday calls for the family home to be counted in calculating a person's wealth and their capacity to contribute to their own aged care.

Aged and Community Services Australia urged the government to “show leadership” and “make the hard decisions” on aged care so the industry could fund the 82,000 new beds that would be required by 2020.

“What we need is a scheme in which the people who can afford to contribute to the cost of their care and accommodation, do so,” ACSA chief Patrick McClure said.

Aged Care Association Australia chief Rod Young said the commission's report gave the government a template for reform but it would need to be carefully modelled to ensure it did not threaten the financial viability of aged care homes.

Source: The Australian - 9 August 2011
Journalist:  Sue Dunlevy

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Lenders Missing From Reverse Mortgages

The list of reverse mortgage providers is shrinking as the number of people needing to utilise equity release programs is growing, an industry body has stated.

SEQUAL chairman and managing director of Australian Seniors Finance John Thomas has stated that the reverse mortgage market has seen an exodus of participants. He commented that a difficult funding environment had seen many lenders withdraw.

“A lot of providers are suffering from a lack of funding. We have about nine members in SEQUAL. If you go back three, four, five years ago we probably had something like 25 members. Some have withdrawn, and some have closed their books to new business. Funding at the moment probably prohibits a lot of people from entering the market,” Thomas commented.

While the lenders may have exited the market, Thomas stated that demand for the products remains strong. As Australia’s population ages, Thomas indicated, equity release programs could become increasingly important.

“There are lots of seniors out there who, given the right considerations, want to look after themselves and want to fund themselves, so the demand for equity release is there.”

Source: Australian Broker - 9 August 2011
Journalist: Adam Smith  

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Call to Overhaul Aged-Care Accommodation

"The average bond paid by new residents has risen from $58,000 in 1997-98 to over $230,000 in 2009-10," the report notes.

The average value of new bonds paid in recent years appeared to exceed the estimated replacement cost of residential aged-care places, the commission said. The commission wants to rationalise the funding system for aged care and ensure the amount a person pays for aged care is determined by their capacity to pay and give them other payment options besides accommodation bonds.

For the first time it wants the value of the family home to be included when assessing a person's capacity to pay.

This could mean, for example, an age pensioner whose home is worth $500,000 (with a partner still living at home) would have to contribute $94.23 towards the cost of their care each fortnight.

If the home was worth $1 million, the pensioner (with a partner still living at home) would have to contribute $205 a fortnight towards the cost of their care.

Source:
Journalist:

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Radical New Plan For Aged-Care Funding

In its report to the Gillard government, Caring for Older Australians, the commission calls for the family home to be counted in calculating a person's wealth, to determine their capacity to contribute to their own aged care.

It is anticipated the public cost of aged care will rise from $10 billion to $50bn a year in 40 years.

The commission's report calls for fundamental structural reform, with aged-care services recast on the basis of a consumer's entitlement rather than area-based rationing of services.

Its focus will move towards a user-pays system. Key to the reforms is facilitating Australians' overwhelming desire to continue living in their home as long as possible, and hopefully until they die, the commission says. "Older Australians generally want to remain independent and in control of how and where they live, to stay connected and relevant to their families and communities, and to be able to exercise some measure of choice over their care," it says.

Source: The Australian - 9 August 2011
Journalist: Stephen Lunn & Sue Dunlevy

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It's Thumbs-Up From Most of the Industry

But the Combined Pensioners and Superannuants Association of NSW was in the minority as industry voices praised the blueprint as a move in the right direction, and urged the government to begin the process of reform as soon as possible.

Advocates Give Aged Care Report Tick of Approval

The Productivity Commission's report proposing a complete overhaul of Australia's aged care system has been largely welcomed by aged care advocates and providers.

The Commission says the Government should make a raft of changes to give older Australians more choice, but also require them to contribute more to the cost of their care and accommodation.

The Council on the Ageing (COTA) says the Commission's recommendations would improve life for older Australians.

Minister for Ageing Mark Butler says the Productivity Commission's report aims to give people more choice.

"We know that older Australians overwhelmingly want to live independently in their own home as long as possible and preferably if possible for the rest of their lives," he said.

"This report emphasises the need to gear our aged care and our health systems around that preference greater consumer choice."

Source: ABC - 8 August 2011
Journalist: Meredith Griffiths

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Tighter Rules On Reverse Mortgages

The Federal Government has moved to tighten the rules around reverse mortgages, asking older Australians and other interested stakeholders to comment on draft legislation which would impose statutory protection against negative equity and tougher disclosure requirements.

The Assistant Treasurer and Minister for Financial Services, Bill Shorten, described reverse mortgages as being different to other credit products and therefore requiring laws that took account of their unique characteristics.

“With these new measures, older Australians can have greater confidence when using these products and will be able to make better choices,” he said.

Source: Money Management - 8 August 2011
Journalist: Mike Taylor

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'No Negative Equity' Guarantee To Be Law

Draft legislation covering reverse mortgage lending would codify the “no negative equity” commitment that has been a feature of industry self-regulation. The draft proposes that if a debtor pays out a contract and the loan amount exceeds the market value of the property the borrower will be able to terminate the contract if the amount being repaid is at least equal to the property’s market value.

This provision is included in the exposure draft legislation covering phase two of national consumer credit reform released by the Assistant Treasurer, Bill Shorten, on Friday.

Source: Banking Day - 8 August 2011
Journalist: John Kavanagh

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SEQUAL Standards to Become Law

Under the draft legislation of phase two of the NCCP, released Friday, reverse mortgage holders would be protected against entering negative equity. The regulation echoes industry body SEQUAL's code of conduct.

The additional inquiries put forth in the exposure draft once again reflect SEQUAL's existing code of conduct. SEQUAL CEO Kevin Conlon previously told Australian BrokerNews he expected regulations of the reverse mortgage industry to be little more than a "health check" which would codify the industry's self-imposed requirements.

Source: Australian Broker News
Journalist: Adam Smith

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Living Longer with More Time to Spend

Over the 20th century, life expectancy of people born in Australia increased by 21.4 years for males and 23.3 years for females. Change has been impressive over shorter periods, too. Between 1990 and 2005, life expectancy rose by 4.8 years for a man and 3.4 years for women. Australian men have the fourth longest life expectancy (to 78.7 years) in the world behind Iceland, Japan and Hong Kong, and our women have an average lifespan (of 83.5 years) beaten only by Japan and Hong Kong.

This increase in life expectancy is, for most Australians, a positive outcome. As my chart shows, most elderly people report a high level of satisfaction with life; indeed, a higher degree of satisfaction than is reported by people in their 20s.

In a paper called Modelling and Forecasting Ageing in Australia, Heather Booth and Leonie Tickle conclude that female baby boomers who survive to age 65 can expect to live to age 90.3; for male baby boomers aged 65, life expectancy is 86.5 years.

Expressing this another way, a woman in her mid-60s today has a 50-50 chance she'll be alive in her early 90s; a man in his mid-60s today has an even-money chance of being alive in his late 80s. Australia's most rapidly increasing age group, in percentage terms, will be the 100 year-plus category.

Source: The Australian - 3 August 2011
Journalist: Don Stammer

SEQUAL Chief defends Senior Australian's right to stay in their own home after retirement and calls on Financial Planners to provide appropriate and affordable advice

AUSTRALIANS are facing retirement with less superannuation after the global financial crisis. They now face another threat to their retirement wealth from weakening property prices.

Analysts are divided on whether Australia's housing market is overvalued, though most rule out a crash. But there is strong evidence that homeowners could face years of minimal price growth, with inflation slashing property prices in real terms.

The falls in superannuation, and recent declines in homes prices in most capital cities, have focused retirees' and pre-retirees' minds on home equity, a source of wealth that has long been taken for granted.

Australia's over-65s own about $349 billion of home equity wealth. More than 72 per cent of over-65s own their home, and that home represents more than 75 per cent of their total personal wealth.

"We're talking about a very large pool of wealth; a very obvious concentration of wealth in a particular asset," says Kevin Conlon, chief executive of SEQUAL, the peak industry body that governs equity release. "It's no surprise how that happened when you consider tax benefits of owning your own home and the natural response to the security of having a roof over your head. It's delivered them extraordinary personal wealth; it's almost an unintended wealth creation strategy."

Conlon says the fact the first baby boomers are turning 65 means there is the "beginning of a conversation" about how they can best access home equity.

Source: The Australian - 3 August 2011
Journalist:Ben Power

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Accessing Home Equity

IT appears easy to access home equity in retirement: you sell your house and downsize. But that is just one option.

You can also borrow, take out reverse mortgages, sell part of your equity, involve your family or rent out your property. There are many strategies and, along with the emotional and lifestyle considerations, it's a surprisingly complex issue that requires serious long-term planning.

You also need to consider any decision about accessing home equity in a broader context. "The things you need to be aware of are what your income needs are now and into the future, and what your capital needs are now and into the future," Heaven says.

Source: The Australian - 3 August 2011
Journalist: Ben Power

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Nursing home residents who opt to pay an upfront bond to enter a nursing home might need to find $361,689, up from an average $233,000, if the true cost of building accommodation is to be funded by the system, says the report by Deloitte.

The report was released a week before a new aged care funding system drawn up by the Productivity Commission is unveiled by the government.

The sector is in crisis, with nursing home providers claiming the current rigid federal funding model fails to cover the true cost of aged care.

Source: The Australian 2 August 2011
Journalist: Sue Dunlevy

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Ageing Australia Provides Planning Opportunity

Government spending on aged care is projected to increase from 0.8 per cent to 1.8 per cent of gross domestic product over the next 40 years, since the number of people of working age capable of supporting each Australian aged 65 and over will drop from five to only 2.7 people within the period.

This was one of the key findings of the 2010 Intergenerational Report, with the subsequent Productivity Commission’s draft report on Caring for Older Australians examining ways in which retirees and the Government can respond to the challenges of an ageing population and the future funding costs of aged care.

In her presentation on Caring for Older Australians at the Money Management Retirement Incomes workshop, Strategy Steps director Assyat David outlined the challenges of an ageing population for financial planners and the opportunities aged care can provide to practitioners.

David said Australia’s rapidly ageing population provided planners with unique client opportunities that to date have remained largely untapped in the aged care sector. These include:

Source: Money Management - 22 June 2011
Journalist: Jayson Forrest

Reverse Mortgages Grow by 11%

Reverse Mortgages Moving Forward

19 June 2011 More Aussies in their retirement are releasing capital from equity tied up in the family home. The market reached $3 billion as baby boomers hit retirement with insufficient money in their super funds and other investments to maintain their lifestyle. They could, of course, sell their houses and down-size, but that often means moving away from a property they have lived in for some time, and potentially away from friends and family. Kevin Conlon, chief executive of the Senior Australians Equity Release Association, says choosing a reverse mortgage, for many, is a more sensible way of achieving the same outcome.

Source: BNET June 19 2011
Journalist: Phil Dobbie

Reverse Mortgages Pros and Cons

''Edith'', a widow, is positive about her reverse mortgage. She initially took one out to fund an overseas holiday and give her house a much-needed facelift. This enabled her to improve living conditions and make the house more suitable for her mentally ill son.

That she could access her equity was a blessing. But she was mindful not to spend too much on the reverse mortgage, since she wanted to leave a decent inheritance.

Figures from the latest SEQUAL/Deloitte Reverse Mortgage Survey state there are 39,000 reverse mortgages on issue in Australia.

And the chief executive of Senior Australians Equity Release Association (SEQUAL), Kevin Conlon, says the equity-release concept is gaining traction as an increasing percentage of the population reaches retirement age. But what are the implications for consumers?

Mr Conlon says it might mean more seniors will have more comfortable lives. He says about $350 billion is stored in the homes of the over-65s and the house represents about 70 per cent of their personal wealth.

''As they sit in retirement, that storage of wealth in bricks and mortar becomes quite unsuitable to what they actually need,'' he says. ''And that's where we get this often-quoted phrase, 'asset rich, cash poor'. We believe there is an inevitable demographic shift that will see the equity-release market grow significantly over the next few years.''

Source: Domain Online - 4 June 2011
Journalist: Josh Jennings

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Could Equity Release Schemes Help People Cope in Retirement

19 per cent of future retirees do not know how they are going to fund their retirement years, a new poll has found.

This uncertainty could see many homeowners between the ages of 55-95 look towards equity release schemes, which allows them to free cash locked up in their homes.

The report, ‘Future of Retirement: The Power of Planning’ released by HSBC, found that two-thirds of people do not think they will be able to cope during retirement.  

David Wells, head of investments, pensions and savings at HSBC, said: "This report reveals a disturbing lack of awareness and planning about how people expect to fund their retirement.

"For far too many there is still an assumption that the state will provide or simply a lack of knowledge about retirement incomes."

The report uncovered mixed responses across the globe, with some 38 per cent of French respondents admitting they did not know what their main source of income was going to be, while 84 per of Malaysians claimed to have a plan. 

Mr Wells pointed out that with much of the world facing an uncertain financial future, people need to stand up and take control of their own situations.

"Just saying 'I don't know' is akin to burying your head in the sand – storing up big problems for later on," he warned.

It is thought that those individuals who have a plan for their retirement save on average 2.5 times more than people who do not know where their cash is going to come from.

Source: Key Retirement Solutions - UK 31 May 2011
Posted By: David Hancock


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Reverse Mortgage Hits 3bn

The market for reverse mortgages has hit $3bn according to a new report.

The Deloitte report, commissioned by SEQUAL, shows that as of 31 December the Australian reverse mortgage market was comprised of more than 41,000 loans with total outstanding funding of $3bn. The total represents 11% growth in the market from 31 December 2009.

SEQUAL CEO Kevin Conlon said reverse mortgages may continue to grow in popularity as a new generation moves toward retirement.

Source: Broker News - 26 May 2011
Journalist: Adam Smith


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Planners Uninterested In Reverse Mortgages

The reverse mortgage market is returning to 2008 levels, but financial planners are missing in action, according to Senior Australians Equity Release Association (SEQUAL) chief executive Kevin Conlon .

Research commissioned by SEQUAL and conducted by Deloitte revealed that as at December 31, 2010, the reverse mortgage market in Australia consisted of more than 41,000 reverse mortgage facilities with total outstanding funding of $3 billion (growth of 11 per cent over the 12 months from December 31, 2009). Deloitte Actuaries and Consultants partner James Hickey said that settlements were at $320 million as at December 2010 (a 22 per cent increase from 2009) and more than 5,600 new borrowers accessed the equity in their homes in 2010. Hickey said the figures showed that the market was bucking the downward trend seen during the global financial crisis.

Conlon said it was a robust market considering that there were now fewer providers, and was pleased to note that people were only borrowing what they needed. However, he said SEQUAL believed that borrowers needed advice and yet financial planners seem to have dropped the ball when it came to reverse mortgages.

Source: Money Management - 26 May 2011
Journalist: Caroline Munro


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Reverse Mortgages Resume Growth Track

New Reverse Mortgage Loans totalled $321 million in 2010, a level last seen before the GFC bore down on Australia.

Growth in the reverse mortgage market has reached levels last seen before Australia bore the full brunt of the global financial crisis, according to a study by Deloitte.

In 2010, new reverse mortgage loans totalled $321 million, in line with an increase posted in 2008 and well above the $263 million worth of settlements in 2009, the Deloitte study showed.

The growth in new loans, or settlements, brought Australia's reverse mortgage market to $3 billion in funds outstanding as of 31 December 2010.

Deloitte Actuaries and Consultants partner James Hickey said the average loan size edged up to $72,500 from $70,000 a year earlier.

Hickey said the market for equity-release products, such as reverse mortgages, had yet to return to its 2006 and 2007 peak.

"Nevertheless, there remains a gradual recovery in growth, which is encouraging," he said.

SEQUAL chairman John Thomas said he never expected to see a boom in reverse mortgages.

"By nature, reverse mortgage borrowers move slowly and with consideration," Thomas said.

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Seniors Turn to Reverse Mortgages to Cope with Rising Costs of Living

THE value of reverse mortgages in South Australia has tripled a study has found as retirees become more resourceful in combatting the rising cost of living.

Since 2005, the mortgages - in which a bank takes equity in a home - have increased to $270 million, a Deloitte study commissioned by the Senior Australians Equity Release Association (SEQUAL) has found.

Money released through the mortgages, which are limited to outright home owners aged over 60 and need no repayments until the home is sold, are used to boost income, repay debt and pay for renovations.

SEQUAL chief executive Kevin Conlon said Australians aged over 65 had about $345 billion in wealth wrapped up in their homes and he expected the popularity of reverse mortgage to grow.

"There's a lot of wealth that's been achieved. We're right on the doorstep in 2011 when the baby boomers retire," Mr Conlon said.

Council of the Ageing SA chief executive Ian Yates said reverse mortgages should be a "later resort" for recently retired baby boomers, expected to live at least 20 years beyond retirement.

"We ought to be able to utilise the home as a liquid and fluid asset," Mr Yates said. "Our generic point of view is to take financial advice because people don't fully understand the power of compounding interest."

Source: The Adelaide Advertiser - 25 May 2011
Journalist: Meredith Booth

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Reverse Mortgage Market Set to Rebound

The proportion of retirees taking out reverse mortgages will grow in the coming years, as the borrowing option becomes an income supplement rather than a way of paying for holidays, an industry body says.

The value of outstanding reverse mortgage loans stood at $3 billion at December 31, up from $2.7 billion 12 months earlier.

There were $322 million worth of reverse mortgage loans written in 2010 - equal to the amount written in 2008 - taking the number of loans to 41,600 at December 31, up seven per cent from a year earlier.

The Senior Australians Equity Release Association (SEQUAL), an industry body for the reverse mortgage market, says that average amount remains conservative.

It says it shows retirees are only borrowing what they need, rather than what they can get.

"What we are seeing is a very clear shift towards more caution and using it to supplement income," SEQUAL chief executive Kevin Conlon said.

Source: The Age & The Sydney Morning Herald- 25 May 2011
Journalist: Drew Cratchley

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Reverse Mortgages on the Rise for Retirees

A new report shows an increasing number of older Australians are turning to reverse mortgages to help them fund their retirement.

A study commissioned by the reverse mortgage industry found that $3 billion is now being borrowed against family homes in reverse mortgages, and that is an increase of more than 10 per cent in a year.

The market for reverse mortgages has not quite returned to the heady days before the global financial crisis.

However, there are strong signs that older Australians are using the financial product to make up for inadequate planning for their retirements.

Many people are approaching retirement having concentrated their wealth in the family home and, whilst that has served them well in terms of wealth creation, when they get to retirement they find themselves asset rich and cash poor," explained Kevin Conlon, the chief executive of SEQUAL, the Senior Australians Equity Release Association - the body representing the majority of reverse mortgage lenders.

"So a reverse mortgage is one method of releasing equity from the home in order to convert it into wealth that is more useful in retirement. The key to these transactions is to borrow what you need, when you need it."

Mr Conlon says growth in reverse mortgages slowed during the financial crisis, but has since picked-up.

Source: ABC News - 25 May 2011
Journalist: Simon Santow

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Australia' Reverse Mortgage Market Reaches 3bn December 2010

James Hickey, Deloitte Actuaries and Consultants partner, who led the study, said that there were more than 5,600 new borrowers accessing the equity in their homes in 2010. “With settlements worth $320m, the size of the market has returned to 2008 levels, which is a 22% increase over 2009,” he said. “The average size of each loan also increased to $72,500 (from $70,000 in 2009). When we initiated this study on behalf of SEQUAL in December 2005, the average loan size was $51,148.

Kevin Conlon, Chief Executive of SEQUAL, the peak industry body which governs equity release providers and delivers consumer safeguards, said, “The majority of equity release customers are couples around 75 years old who have accumulated wealth through home ownership. They mainly use their released funds to supplement their retirement income, undertake home improvements following a decision to “stay in place” during their retirement or clear their outstanding debt.

“It appears that attitudes towards retirement funding are changing. As Baby Boomers approach retirement, equity release strategies are increasingly seen as a useful option to access the wealth stored in their home in order to meet the challenge of living longer and living well.”


Source: Deloitte - 25 May 2011

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Government May Support Reverse Mortgages

Reverse mortgages may see government support as Australia’s population ages, a reverse mortgage broker has predicted.

Darren Moffatt, managing director of Seniors First, has claimed that equity release will be crucial to fund aged care in the future.

“The Productivity Commission has stated that there is not enough money in the budget to fund aged care without some sort of equity release program,” Moffatt said.

Moffatt believes this budget shortfall may mean government involvement in the reverse mortgage market. According to Moffatt, the products will become increasingly important as more Australians head toward retirement age and find themselves cash poor, and the government finds itself increasingly unable to meet the growing demand for aged care.

Source: Australian Broker News - 12 April 2011
Journalist: Adam Smith

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Mortgage Origination: Breaking New Ground

While the broader mortgage industry may be facing a number of challenges as it struggles to come to terms with the shape of the post-GFC world, the outlook is good for mortgage brokers who have survived the upheaval and are ready to cope with the demands of the new regulatory environment.

Despite concerns about the effect of the new legislation, Naylor believes most brokers are prepared for the changed requirements ushered in by the NCCP Act and are already considering new business opportunities.

“Mortgage brokers have been diversifying over the past few years to not be so captive to one income stream. Some residential mortgage brokers have been looking at financing and equipment finance for diversification,” he says.

Despite the interest, Naylor believes moving into risk sales may create problems for some brokers. “The danger is becoming a jack-of-all-trades and master of none,” he says.

Another area of contention is whether mortgage brokers should be providing advice and sales of equity release products such as reverse mortgages.

The debate was sparked in February by comments made by Senior Australians Equity Release Association of Lenders (SEQUAL) chief executive, Kevin Conlon. At the time, Money Management reported he believed there was “no reason why the broker market can’t step up to the challenge of providing the advice necessary to make an informed decision”.

The Financial Planning Association was quick to respond, claiming reverse mortgages need to be provided within the bounds of a comprehensive advice plan and with a full understanding of the client’s needs.

Source: Money Management Online - 31 March 2011
Journalist: Janine Mace

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ASIC to Focus on Advice to Aged

ASIC has revealed that it will focus on regulating financial advice provided to retirees, as part of a newly launched "shadow shop" of the financial planning industry.

ASIC Commissioner Greg Medcraft said in a statement that ASIC is focusing on retirement advice because the numbers of people getting ready to retire is growing, particularly baby boomers.

The advice provided by mortgage brokers in regard to equity release transactions was recently questioned by financial planning peak body the Financial Planning Association, which has argued consumers should be given a full financial plan, rather than go to a broker.

However, SEQUAL CEO Kevin Conlon argues that brokers are able to advise effectively on equity release transactions.

Source: Australian Broker News - 21 March 2011
Journalist: Ben Abbott

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New ASIC Website Launched

15 March 2011: Today the Australian Securities and Investments Commission (ASIC) launched a new webside called MoneySmart to help people make smart choices about their personal finances. 

MoneySmart is for all Australians - young or old, rich or poor, investing or paying off Debt.

The Website offers free, independent guidance so people can make the best choices for their money.

ASIC has been active in financial literacy for many years.  ASIC's previous consumer websites were FIDO and Understanding Money.  Each was a great source of financial information for many years, with simple steps and basic calculators to help people sort out their money.

MoneySmart replaces these two websites combining the best features of both and adding much more.

Sharing the Spoils: More Australians are Looking to Access the Equity in Their Home

RECORD numbers of senior Australians are expected to tap into the equity of the family home to pay for aged-care and lifestyle expenses at a time of their lives when alternative funding options don't exist.

Inadequate superannuation balances and limited other asset and income prospects are leaving elderly Australians with nowhere else to turn.

Growing numbers of younger, more financially savvy retirees also are expected to start making use of the facilities so their superannuation savings can benefit from longer periods in the concessionally taxed environment.

Another force of demand for the products will come from the same economic conditions that drove down supply of equity release providers, says SEQUAL chief executive Kevin Conlon.

"Increasingly, people later into retirement -- and the average age of a reverse mortgage user is 74 years -- are struggling to meet the significant increases in cost of living, like electricity charges and food prices and even recent impacts like the floods and cyclones," he says. "These cost-of-living rises late in life are having a very severe effect on retirees."

Conlon says the financial institutions operating in the market today have made a commitment to meet any demand for growth. It's likely, also, that new providers will emerge and not necessarily from the banking sector. The Cooper review of superannuation, for example, suggested super funds were well placed to develop equity release products because, as investments, they match the funds' long-dated funding requirements.

Whoever they are, the providers may get busy quickly if the market takes off as strongly as is being anticipate.

Source: The Australian - 23 February 2011
Journalist: Jacquie Hayes

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Broker Equity Release Credentials Disputed

Responding to recent comments made by the Financial Planning Association (FPA) that Mortgage Broking doesn't take into account all the financial circumstances of a client, SEQUAL CEO Kevin Conlon said that "it is not the source of advice but the quality of advice that matters."

Conlon also said he has a “high regard for the professionalism of finance brokers”.

“The industry has come a long way with new regulations and the leadership shown by peak bodies such as the MFAA and the FBAA which have been committed to professionalism,” Conlon said. “I think if brokers have at law a high duty of care towards their clients - which they do under new regulations - then provided they understand the nature of equity release transactions and their implications for consumers, they should be trusted,” he said.

Conlon argues that equity release transactions do not require the provision of a full financial plan, and that the scope of advice for such transactions could needs to be more focused in order to benefit clients.

“For years now SEQUAL has been pushing other industry bodies to recognise there is a need to show leadership in defining what is appropriate advice for an equity release transaction in order to guide their members,” he said. “Without this guidance, quite understandably they are defaulting to providing a full financial plan to consumers. In my view that is not necessary, and certainly it increases the costs and there is strong consumer resistance to receiving a full financial plan in what is typically a $60K equity release transaction.”

Source: Broker News - 22 February 2011
Journalist: Ben Abbot

Editors Note:

The SEQUAL CEO, Kevin Conlon welcomes the participtation of the Financial Planning Association (FPA) in the important debate around the availability of financial advice for Senior Australians.

Confirming that he agrees with the recent comment from FPA executives that competent financial advice is needed to assist consumers to make informed decisions, Conlon repeated his call for there to be a greater effort to ensure that this advice is both accessible and affordable.

He pointed out that SEQUAL has developed a Planner Education Program and a Code of Proper Process to assist financial advisers to meet the growing demand for advice on Equity Release Strategies for meeting the challenge of retirement funding.

Financial Planners can enrol in the SEQUAL Education program at:
www.sequaleducation.com.au and

Download the SEQUAL Code of Proper Process from the SEQUAL Consumer Website. 
www.sequal.com.au

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Ageing Population to Revive Reverse Mortgage Sector

The reverse mortgage sector has shrunk drastically over the past few years, with many players exiting the market due to funding issues — but some industry experts predict the demands of the ageing population and possible Government endorsement could revive the sector.

SEQUAL chief executive Kevin Conlon agrees that the reverse mortgage market will rise again due to the demands of an ageing population, as well as the aged care funding issue the Federal Government is currently looking into.

“No one is denying the inevitability of the demographic shift, and the Government is starting to turn its mind to addressing the problems of growing pension claims and a shrinking labour market supporting that pension claim,” Conlon said.

The Productivity Commission released a draft report last month that recommended that a Government-backed (but not necessarily operated) Aged Care Equity Release scheme be established, “which would enable individuals to draw down on the equity in their home to contribute to the costs of their aged care and support”.

While acknowledging the complexity of equity release products and the consumer nervousness around them, the commission’s report stated that “a public scheme could play an important role in inspiring confidence in equity release products and stimulating market development, although it could also crowd out the further development of private schemes”.

Advisers could also play a critical role in the uptake of this sector, but the scope and price of advice given about reverse mortgages needed to be decided upon first, according to Conlon.

Source: Money Management - 18 February 2011
Journalist: Milana Pokrajac


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Adelaide Bank Profit Up by 67pc

The company has hoisted its first half net profit by 67 per cent to $173.9 million, chief Mike Hirst said yesterday.

The bank's retail deposits climbed 10 per cent to $3.3 billion, and new loan approvals climbed 31 per cent $1.67 billion from last year's first half.

Cash earnings climbed 16 per cent to $162 million.

Income from the bank's operations jumped 16.2 per cent to $620.8 million with its home "equity release" business spiking 109 per cent to $18.6 million as the value of its portfolio increased.

Mr Hirst hoped to expand its joint venture Homesafe Solutions business, which unlocks equity in Melbourne and Sydney homes for retirees in return for cash and a stake in the property.

Source: The Advertiser - 15 February 2011
Journalist: Meredith Booth


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Industry Split over Equity Release Advice

Different opinions have emerged about whether advice around equity release products such as reverse mortgages should come from financial advisers or mortgage brokers.

Senior Australians Equity Release Association (SEQUAL) chief executive Kevin Conlon (pictured) sparked the debate while discussing changes to the National Credit Consumer Protection Act (NCCP) introduced on 1 January, 2011, which placed mortgage brokers under stricter licensing and disclosure requirements.

“If you look at the new national regulation around credit licensing and the higher duty of care that is owed to consumers as a consequence of that regulation, there is no reason why the broker market can’t step up to the challenge of providing the advice necessary to make an informed decision,” Conlon said.

Source: Money Management - 14 February 2011
Journalist: Milana Pokrajac

Editors Note:

The SEQUAL CEO, Kevin Conlon has made it quite clear there is no industry split on the need for competent advice around Equity Release products, however he emphasised the importance of the advice being both affordable and accessible. 

Saying that, "SEQUAL will continue to focus on the quality of advice that is available to assist Senior Australians to make informed decisions rather than be distracted by debates over who should be the source of the advice."

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Prepare to Pay More for Aged Care

The clear message from the Productivity Commission's draft report into aged care is that Australians must start factoring a greater share of the cost into their overall financial planning.

The proposals in the 574-page report, to be finalised in June, change the answers to such basic questions as

"How much do I need to save?" and "How long will my retirement funds last?", advisers say.

In essence, the Productivity Commission says in Caring for Older Australians that the costs of accommodation, everyday living expenses and health or personal care should be separated out. It says only the latter is truly the government's responsibility and people should contribute more to the costs of their accommodation and living expenses if they can afford to do so, although there should continue to be a "safety net" for those of limited means.

In particular, it tackles the sacred cow of the family home, suggesting the huge wealth locked up in property should be helping to pay for aged-care costs.

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Unlock Home Savings to Fund Old Age

Ageing baby boomers are haunted by two questions: will I have enough money to live comfortably in retirement; and how will I pay for aed care when the time comes?

Earlier generations of Australians trusted government to meet their needs on both fronts.  Baby boomers know this won't work for them because there are too many of them and not enough younger workers to pay the necessary taxes.

In any case baby boomers are used to paying a bit extra to get what they want and aren't averse to contributing private resources to top up public support. This is just as well, according to the Productivity Commission's draft report, Caring for Older Ausstralians, release last week, because public resources won't stretch far enough to fund adequate aged care for the growing number of older people.  

Source: The Australian - 25 January 2011
Author: Ian Harper

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Aged Care Needs a Makeover 

Our System is underfunded, riddled with inconsistencies and lacks choice for consumers who feel trapped.

For anyone getting on a bit or who has an ageing relative, the big news is the Productivity Commission's draft report on the future of aged care.  It's a challenging future.  The number of Australians who will access aged care will almost quadruple over the next few decades, from 1 million this year to over 3.6 million in 205.  That's a significant and unprecendented increase in demand, mostly because baby boomers are growing older and we are living longer.

So there is a massive deman for increased aged-care services and the chance now to overhaul a tired, complex and underfunded aged-care system.

Source: The Sydney Morning Hearald - 24 January 2010
Author: Lin Hatfield Dods

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Innovative Ideas are Required to Fund Aged Care

IMPLEMENTATION of the draft recommendations as proposed in the Productivity Commission report released on Friday would imply a significant shift in focus from a system-centred approach to a consumer-centred approach.

The commission suggests the responsibility for aged care be split, with government being concerned with policy, and a separate regulatory mechanism, the Australian Aged Care Regulation Commission, policing regulation.

This would mean government can, into the future, deflect criticism about aged care on to the new regulator. The idea of a regulator to monitor quality, service and prices; enforce regulations; educate providers; and collect and disseminate data isn't a negative.

But questions arise around what the penalties for non-compliance might be, whether there is compensation available for breaches that harm the aged, and how it would be policed.

There is a lot more work to be done and this is the only the first salvo. Older Australians, in all their diversity, look forward to further consultations with the Productivity Commission and government. What we do agree on is that Australia needs an aged care system that is truly consumer focused, responsive and can meet the needs of our society into the future.

Source: The Australian - 24 January 2011
Author: Michael O'Neill

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Government Holds Fire on Proposal to Impose Aged Care Costs

Minister for Ageing Mark Butler says the Government is determined to push ahead with reform of the aged-care sector before the next election, but will wait to assess public opinion before deciding whether to accept proposals to make people pay more for care.

A draft Productivity Commission report has recommended a range of changes to the aged-care sector, including requiring people to contribute more towards the cost of services they receive.

People with limited financial means would be protected from the changes, which are designed to ensure that the sector could cope with increased demand and offer a wider choice of services to consumers.

Mr Butler said Prime Minister Julia Gillard had made it clear the Government would act on aged care during this term of Parliament, but refused to be drawn on whether more contentious aspects of the draft plan would be supported.

''The Productivity Commission has been very detailed in its ideas about how funding arrangements in this respect would be dealt with and we're looking forward to hearing what the community response and the stakeholder response to this is,'' he said.

Source: The Canberra Times - 22 January 2011
Journalist: Peter Jean

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AN OVERHAUL recommended for the fledgling aged-care sector has been labelled ''HECS for the elderly'' after calling on older people to pay for a greater slice of their care.

The Productivity Commission yesterday released draft reforms for the $10.1 billion sector that would revolutionise how the system is funded.

Wealthy people would pay as much as 25 per cent of their costs while those with less would contribute 5 per cent. And for the first time, the family home would count towards a person's ability to pay.

Such loans would require no repayments until the home was sold, effectively delaying repayments until after a person's death.

Unfortunately for consumers, this draft report means we'll be paying as never before for our own aged care. The commission is proposing a deregulated system that removes caps on high care accommodation charges and puts greater onus on consumers to foot the bill.

Source: Brisbane Times - 22 January 2011
Author: Michael O'Neill - National Seniors

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SOME 60,000 older Australians already pay accommodation bonds for their care, but tens of thousands more will join them in coming years under a proposed overhaul of the system.

The Productivity Commission wants to end the two-tier pricing system that allows some aged care residents to pay an average $22.51 a day for their accommodation and forces others to lend their hostel or nursing home an average $232,272 for their stay.

Accommodation bonds, introduced by the Howard government in 1996, have steadily climbed in value. Total holdings more than doubled to $9.1 billion in the four years to June 2009.

Hostels and nursing homes use the bonds as interest-free loans to invest in their buildings and services and can deduct up to $307 a month for up to five years but are obliged to return the balance to the residents or their estates when they leave or die.

Source: The Australian - 22 January 2011
Journalist: Siobhain Ryan

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Under recommendations put forward in a Productivity Commission draft report, to be released today, the economic advisory body warns that taxes will have to increase to meet the care demands of ageing baby boomers unless Australians begin to contribute more towards their nursing home care.

The already overburdened sector faces a demographic time-bomb, with the number of people expected to rely on the system more than trebling to more than 3.6 million by 2050.

Source: The Australian - 21 January 2011
Journalist: David Uren and Lauren Wilson


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The Productivity Commission says anyone who is paying more than $80,000 for an accommodation bond is losing out, with average daily accommodation charges coming to only $22 a day.

The commission says nursing homes in many regions have been able to exercise near monopoly power over prospective residents to extract big bonds, while aged people have also had powerful incentives to put the proceeds of their home sale into an accommodation bond.

Source: The Australian - 21 January 2011
Journalist: David Uren, Economics correspondent

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Older Australians could be forced to remortgage or even sell their family home to pay for aged care under proposals to make people take on greater financial responsibility in their retirement.

A Productivity Commission draft report into the aged-care sector has recommended an overhaul of the industry, including a shake-up of the means test, expanding the use of accommodation bonds, making the rich pay more for care, abolishing caps on fees and bed numbers and pay rises to attract more nurses.

A single gateway agency would also be set up, replacing a myriad of overlapping government agencies and assessment processes that families confront as their loved ones enter and progress through the different levels of aged care.

The commission says the changes would give people greater choice of nursing home providers in their old age. "Older Australians generally want to remain independent and in control of how and where they live their lives," the commission's deputy chairman, Mike Woods, said. In one of the biggest changes flagged in the 500-page report, released today, seniors would be subjected to a revamped means test to determine their capacity to pay for care, with those able to afford it required to pay a higher co-contribution.


Source: The West Australian - 21 January 2010
Journalist: Andrew Tillett

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Industry groups generally welcomed the Productivity Commission's recommendations, while the federal government signalled its support for a major overhaul of the sector.

Minister for Ageing Mark Butler refused to rule out family homes having to be sold to finance nursing home care through a bonds-style or a reverse mortgages system.

Australian Pensioners and Superannuants Federation policy officer Charmaine Crowe attacked the draft report, saying an expansion of aged care bonds was an inequitable way to cover the growing cost of the sector.

Ms Crowe said her group was “very much anti-bonds, we don't see this as a fair way for the funding of aged care by consumers”.

The Productivity Commission will tomorrow release its draft findings on the viability and future of the aged care sector and its advice to government is expected to canvas a variety of alternative funding arrangements, including accommodation bonds.

Aged care industry expert Greg Mundy said yesterday the key economic advisory body would need to address "some really big threshold questions", including how to structure the financing of the sector to support Australia's ageing population.

He said he hoped the commission would tackle the issue of individual financial contributions to nursing home care, including in the form of accommodation bonds, which to date has remained largely off the agenda.

Source: The Australian - 20 January 2011
Journalist: Lauren Wilson

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Paying off your Mortgage Now

Now you can rip up your mortgage by having your home loan paid for you and join a growing number of families who have kissed their financial troubles goodbye.

Thanks to the new scheme, Derek and Anne Williams can now breath easy. With Homesafe, the pair have had their mortgage eliminated.

It's not a loan and there's no fees repayments. Instead it's a way of unlocking the equity in your home without selling up entirely or taking out a costly reverse mortgage.

And it couldn't have come at a better time - Derek had just had six years of hospitals and sickness.

"And everything went, you know and on a pension we couldn't afford to do the house. Now we're having it painted and we've had the gutters done and we had the floor re-blocked on all the sides," Anne said.

Source: Today Tonight - 7 January
Journalist: Georgia Main

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SEQUAL Warns Regulator Away from Product Design

SEQUAL CEO Kevin Conlon has reiterated his position that the Federal Government regulations of the reverse mortgage market are nothing more than a health check of the industry.

“Some months ago, I predicted that the regulatory review being conducted by Treasury was a health check of the industry,” Conlon says. “I’m confident this is the case.”

“Reverse mortgages are not offered in Australia without a no negative equity guarantee,” Conlon adds. “All SEQUAL members are obliged to provide a no negative equity guarantee, and we welcome the decision to reinforce this fundamental consumer protection through a statutory obligation.”

Conlon has gone on to defend the industry against its critics, citing its historical standards of practice. According to Conlon, of the 42,000 reverse mortgages currently on issue, the Financial Ombudsman has only dealt with four complaints. 

Source: Broker News Online - 23 November 2010

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Reverse Mortgage Market Braces for Regulation

New Federal Government regulations governing the reverse mortgage and equity release market could serve to reduce the market.

Under the new rules, coming into effect early next year, contracts allowing negative equity will be banned, and reverse mortgage providers will be required to produce a consumer statement to disclose the terms of the loan and what it means for borrowers.

However, industry peak body SEQUAL has maintained that the changes will merely bring all lenders in line with voluntary industry guidelines to which 95% of the market already submits. 

Source: Broker News Online - 22 November 2010

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Reverse Mortgage Rules Set for Shake-Up

  Concerns Over Equity Release Product Design Regulation

Speculation has emerged about the Federal Government’s regulation of product design within the reverse mortgage sector, prompting claims by the Senior Australians Equity Release Association (SEQUAL) chief executive, Kevin Conlon, that it would have a harmful effect on the industry.

A regulatory review process covering reverse mortgages is currently underway, with product disclosure, product design and consumer financial literacy being the three broad areas being discussed.

In the weeks leading up to the Federal Election, the Government promised to provide greater disclosure of equity release products and statutory protection against negative equity — with the two changes to be implemented by mid 2012.

Conlon said although the association had gone on the record supporting these initiatives, it would be concerned if other aspects, such as product design, became an element of the regulatory review, rather than allowing legitimate market processes to prevail.

Source: Money Management Online - 22 October 2010
Journalist:  Milana Pokrajac

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  Families Avoid Burden of Care for Aged Parents

Australians have little faith in the family's ability to care for elderly parents, a study shows.  They want the government to do more.

Only 16% of people think families and relatives are best suited to deliver care to the elderly, and 53% think the government is best.  Even fewer - just 3.6% - think business is best suited to the job.

"Australians want more, not less, public delivery of elder care and current arrangements go womewhat against the direction of public opinion," said Gagrielle Meagher, professor of social policy at the University of Sydney, who has analysed the data.

The study, based on the 2009 Australian Survey of Social Attitudes, polled more than 1400 people on their attitudes and expectations of aged care.

Source: SMH -Online 16 October 2010
Journalist: Adele Horin

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Align preservation and retirement age: DoFD

The superannuation preservation age should be aligned with pension age and more means testing of benefits will be needed to contain superannuation costs, the Commonwealth Department of Finance and Deregulation (DoFD) has told the incoming government.

The main problem, noted the DoFD, is that the impacts of the aging Australian population will put too much pressure on retirement income and pension outlays. The government reversing or at least reviewing its policy of population contraction will however slowdown the need for the reforms or lessen their severity.

Source: Financial Standard - 5 October 2010

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Reverse Mortgages: Badly Judged or Just Misunderstood?

Growth in the sector shows the reverse mortgage market certainly offers potential and many Australians approaching or in retirement are exploring alternative avenues to finance their latter years. So why have so many financial planners previously shied away from a market that seemingly offers a wealth of untapped potential?

Kevin Conlon, chief executive officer at SEQUAL, says one of the reasons lies with the scope of advice expected of the financial planning community. “On the whole, advisers should have seen this coming and should have been adopting a more holistic financial plan for consumers where the family home and the retirement options were included. Cash flow, not asset wealth, is the problem many retirees are now facing and this is a result of having a financial plan that does not look at the whole picture. That said, I have sympathy for advisers in the current environment as there is, and has been, no guidance on what is expected of them when it comes to providing advice on this topic.”

Source: Money Management Online - 3 September 2010
Journalist:  Mike Taylor

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For many baby boomers, retirement will be a financial juggling act. Without the backing of compulsory superannuation contributions throughout their working life, many may consider a reverse mortgage as a source of additional retirement income.

A reverse mortgage provides an opportunity to access home equity, with the loan secured by your home. There are no repayments necessary until you 1) sell up, or 2)die – in which case the loan is repaid out of your estate.

Source: Making Money - 24 August 2010
Journalist: Paul Clitheroe

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Ageing Aussies Want to Stay Put

An Australian Housing and Urban Research Institute survey of 1,600 ageing home owners found the vast majority of home owners wanted to stay in the familiar surrounds of their own home, rather than elsewhere.

In response to the survey, SEQUAL chief executive Kevin Conlon said equity release products provided these older home owners to tap into the stored wealth of their home in order to stay in their home.

Source: BrokerNews Online - 19 August 2010

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SEQUAL Responds to Government Reverse Mortgage Regulation Push

Kevin Conlon, Chief Executive of SEQUAL, the peak industry body for the Equity Release market, has responded in support of the initiative announced by the Prime Minister but warns that any regulatory change needs to be carefully considered and proper regard given to the extensive industry self-regulatory initiatives that already exist. He stated that, “SEQUAL is committed to the development of an efficient and ethical Seniors Equity Release market in Australia”.

Conlon has called on Government and Regulators to acknowledge the meaningful consumer protection measures that have been delivered by SEQUAL and provides a warning should this message be ignored.

Source: Reverse Mortgage Watch.com - 10 August 2010
Journalist: Darren Moffattt

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Equity Release Regulations May be Unnecessary: SEQUAL

In response to the Government’s election promise of greater consumer protection measures for reverse mortgages, the Senior Australians Equity Release Association (SEQUAL) has warned proper regard needs to be given to the industry’s self-regulatory initiatives that already exist.

Prime Minister Julia Gillard stated at a press conference in Brisbane that reverse mortgages and home reversion schemes do not currently include protections that recognise their special nature.

She promised that a re-elected Labor Government would provide greater disclosure of the features and fees on equity release products, as well as protection against negative equity.

However, SEQUAL chief Kevin Conlon said the two initiatives identified by Gillard were already market practice for SEQUAL members, and that product disclosure and a mandatory obligation to provide a ‘no negative equity guarantee’ were conditions of SEQUAL membership.

Source: Money Management - 9 August 2010
Journalist: Milana Pokrajac

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Gillard Government to Tighten Reverse Mortgage Rules

Reverse mortgages holders will receive more protection during a property downturn if Labor continues to hold government after the election - but the industry's peak body said most of these proposed policies are already in place.

A re-elected Gillard Government will spend around $100 million as part of its "delivering for seniors" package, which includes greater protection for seniors with reverse mortgages.

Prime Minister Julia Gillard said Federal Labor recognises that special protections are needed for older Australians who are using equity in their homes to gain access to credit.

Kevin Conlon, chief executive of Australian seniors' equity release market industry body SEQUAL, said he supported Labor's initiative but warned that proper regard has to be given to the "extensive industry self-regulatory initiatives that already exist."

"Equity release is likely to emerge as a significant part of retirement funding and the current debate around advice and regulatory review needs to be carefully considered against that growing demand to ensure choices and legitimate strategies in retirement funding are not extinguished through unnecessary regulatory change," said Conlon.

Source: Financial Standard - 9 August 2010
Journalist: Ruth Liew

There's Now a Way to Cash-in on Your Home Without Selling up Entirely

The revolutionary financial product is called Homesafe Solutions - a world first idea, which aims to be the only product on the market giving homeowners access to their equity without financial risk.

"From the point of view of the homeowner, they have the certainty of knowing that they received the money today and they know the share that they will always retain in the future", said the idea's developer, actuary Peter Szabo.

Source: Today Tonight - 27 July 2010
Journalist: James Thomas

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NICRI Provide Confidential, Unbiased Advice to Seniors

Equity release  and reverse mortgage producs are loans that are available to people aged 60 and over, who own their own home and who require access to the equity in their home.  The reasons for needing to access home equity vary beteen individuals, but often include wanting to increase income levels, needing to pay for large expenses or wanting to make large purchases.

Although these types of products have been around for a number of years, many consumers don't know that they have access to free independent information to ensure they fully understand these products.

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Reverse mortgage review only health check: SEQUAL

Strong self-regulation of the reverse mortgage and equity release sector will mean an impending Government regulatory review will only be a "health check", according to SEQUAL.

The Government intitiated its second stage of reforms to consumer credit law this week with the release of its Phase Two Green Paper, which outlines options for enhancing the National Consumer Credit Law in areas that include the reverse mortgage sector.

Source: Broker News Online - 9 July 2010
Journalist: Ben Abbott

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The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, today announced the release of the Consumer Credit Reform Green Paper, National Credit Reform - Enhancing confidence and fairness in Australia's credit law, for public comment.

The release of Phase Two Green Paper builds upon the completion of Phase One, the commencement of the new National Consumer Credit Code on 1 July 2010.

"The Government has delivered Phase One of the consumer credit reforms by bringing together the different state and territory legislation on financial services into a single, standard, National Consumer Credit Law," Mr Bowen said.

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SEQUAL Chief Executive Warns Against Heavy-Handed Regulation

Phase two of the new consumer credit laws, due to come into effect next year, will include enhancements to the regulation and tailored disclosure of reverse mortgages.

Under the reforms, NICRI is calling for financial and legal advice to be made compulsory for reverse mortgage borrowers.

However, SEQUAL chief executive Kevin Conlon warns against heavy-handed regulation.

"Equity release is likely to emerge as a significant part of retirement funding and the current debate around advice and regulatory intervention needs to be carefully considered against that growing demand to ensure choices and legitimate strategies in retirement funding are not extinguished through . . . unnecessary regulation," he says.

Conlon says the industry should define the scope of advice that enables consumers to make informed decisions without burdening them with a default position of having to receive a full financial plan.

He also disputes any presumption that retirees are unable to make informed decisions about their financial affairs simply because they are past a certain age.

Source: The Australian Online - 7 July 2010
Journalist: Sara Rich

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Life Could Be Better In Reverse

There's another alternative to super or selling besides a reverse mortgage, where you re-mortgage your home, only with a twist.

Instead of making regular repayments, the interest is capitalised.

You get a lump sum upfront or a line of credit that you can draw down as you need the money and nothing goes out as interest repayments.

The mortgage is only paid back when you sell or move into a nursing home.

Ah, but the interest is compounding. Is it ever; by not making any repayments, the equity in your home falls every day.

There are shocking stories in Britain of home owners finishing up with negative equity - they owe more than the house is worth.

Since a reverse mortgage can be passed on to your estate, that mightn't worry you but the children won't be too happy.

The good news is it can't happen here.

All mainstream reverse-mortgage lenders belong to the Senior Australians Equity Release Association of Lenders (SEQUAL), which bans contracts permitting negative equity.

Source: The Sun Herald - 5 July 2001
Journalist: David Potts

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Turf War Looms Over Reverse Mortgage Advice

Both the National Information Centre (NICRI) and Senior Australians Equity Release Association (SEQUAL) are currently lobbying the Government to fund advice on reverse mortgages, but disagree on one major point.

NICRI has put itself forward as the sole body for providing legal and financial advice to prospective borrowers, while SEQUAL Chief, Kevin Conlon opposes such a service becoming exclusive to one agency.

"Lets not build barriers as to who can provide this advice.  It shoud be available as widely as possible - where borrowers are," Conlon said.

While he supports every effort to deliver competent and affordable advice to seniors and strongly encourages the Government to fully fund NICRI, Conlon believes access to the aforementioned services should go beyond this agency.

Source: Money Management Online - 1 July 2010
Journalist:Milana Pokrajac

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Investors Turn to Reverse Mortgages for Income

Kevin Conlon, chief executive at the Senior Australians Equity Release (SEQUAL), said there's been a significant move away from ‘desire-based' expenditure to ‘needs-based' including topping up their overall income.

"People approaching retirement want to live well and they recognise their limited financial resources are going to be inadequate to meet that challenge," he said.

"It's that classic situation; asset rich, cash poor. The home is increasingly being considered a part of the planning process as a means to unlock the substantial wealth stored in property."

Source: Financial Standard - 22 June 2010
Journalist: Michael Hobbs

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Open House on Assets Could Unlock Trillions

Actuary Peter Szabo has come up with exactly the right product to put to much more effective use some of the trillions of dollars of 'dead money' sunk into our homes.

Indeed, I would go so far as to suggest it is a product exactly for these times as baby boomers start to retire, with for many if not most of them the family home as their single biggest retirement asset.

What is particularly appealing to me about Szabo's product is that it actually does three things.

Source: Heraldsun Online - 9 June 2010
Journalist: Terry McCrann

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Call For Government Funded Reverse Mortgage Advice

NICRI chief executive Wendy Schilg said the service was an important consumer protection measure that would help retirees and pre-retirees avoid any traps and pitfalls that could arise from reverse mortgages.

Source: Money Management Online - 9 June 2010
Journalist: Chris Kennedy

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SEQUAL Working on Reverse Mortgage Advice

The Senior Australians Equity Release Association of Lenders (SEQUAL) is working with Treasury and industry organisations to develop cost-effective financial advice regarding reverse mortgages, according to its chief executive Kevin Conlon.

Speaking during the release of a SEQUAL/Deloitte survey on reverse mortgages last week, Conlon said there had been a reluctance in the past from consumers to seek out full financial advice regarding the use of reverse mortgages because of the costs 

“I think the important work here is to determine whether there is a subset of a full financial plan that would be appropriate to these transactions and to scale it to these deals.”

Source: Money Management Online - 1 June 2010
Journalist:  Benjamin Levy

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Spend The Inheritance: Reverse Mortgages to Surge

"People have moved away from desire-based expenditure - overseas trips, purchasing holidays - to more needs-based expenditure," he said.

"Typically today we see home improvements and also in terms of topping up their regular income to ensure they can live well in retirement."

The report found there were about $2.7 billion in reverse mortgages outstanding in Australia and there are now about 39,000 households holding a reverse mortgage.

Source: ABC News Online - 28 May 2010
Journalist: Michael Janda

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Senior Australians Postpone or Cut Back During the Downturn

Source: The Australian Online - 29 May 2010
Journalist: Sara Rich

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Reverse Mortgage Growth Continues Slowdown

The market grew 9 per cent last year, from $2.48 billion at the end of December 2008 to $2.71 billion at the end of 2009.

But settlements of new loans showed a slight uptick over the second half of 2009, growing from $122 million to $141 million in the first half of last year, an increase of 16 per cent.

"Hopefully this points to a re-emergence in demand for reverse mortgages," Deloitte Actuaries and Consultants partner James Hickey said Friday.

SEQUAL Chief Executive Kevin Conlon said without government support it would take some time before more non-bank reverse mortgage providers would come back into the market.

"It is still with some regret that having lobbied the government to consider the extension of their stimulus package - some $8 billion dollars committed to the forward market to stimulate a restart in the securitisation market - we weren't able to get the same support for the reverse mortgage market," Conlon said.

Source: Investor Daily - 31 May 2010
Journalist: Wouter Klijin

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The amount of money a person needs to have a happy retirement depends on a number of factors, including life expectancy and the age of retirement.

Statistics indicate that a significant portion of the Australian population retires before the age of 65 and as a result would potentially spend a long time in retirement, depending on their life expectancy.

Half of all women retiring at 55 can expect to spend at least 30.5 years in retirement.  Recent longevity figures published by Rice Warner Actuaries show about 10 per cent of women now at retirment age can be expected to live to 100 or beyond, so many early retirements, for women at least, may last for over 40 years.

The challenge will be to fund a retirement of that duration and to fund it comfortably.

Source: IFA Magazine Issue 504
Author: Crissy De Manuele

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Paying the Price for Reverse Mortgages

Reverse mortgage industry group Senior Australians Equity Release Association of Lenders (SEQUAL) says the average age of a reverse mortgage customer is 74.

The majority of lenders offering these products are SEQUAL members and guarantee the value of the mortgage will not exceed the value of the property, so regardless of how long a customer lives they will never have to repay to the bank more than the value of their home, he says.

"I would caution any consumer from considering products provided by other than SEQUAL members,'' he says.

Source:  The Herald Sun Online - 3 May 2010
Journalist: Nhada Larkin

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Don't Gamble on the Future

While the system is under pressure, there are good facilities around.

To find the most suitable residence and secure a position, you need to be armed with the right information.

No one likes to think about living in an aged care facility but the reality is that one-third of all men and half of all women aged 65 or over can expect to go into permanent residential care later in their lives.

Source: The Age 6 April 2010
Journalist: Bina Brown

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Trouble on the Horizon

While government and the super industry debate about whether 9 per cent compulsory super will be sufficient for the average worker, the generation that missed out is reaching "that age" with inadequate super and virtually no chance of catching up.

Source: The Sydney Morning Herald and The Australian 24 March 2010
Journalist: Annette Sampson

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The Good News Good News from the Recently Released Intergenerational Report is that, on Average, we are living longer (and are healthier)

The challenge is that government funding of the aged pension and health services will become strained.

But it's not just governments that need to prepare for the ageing population; the attitudes and actions we take as individuals also need to change.

To lead a comfortable retired life, particularly in their later years, many Australians will need to draw on some of the value in the family home, by downsizing, by conservatively borrowing against the value of the house through equity release products, or by selling the family home and then renting.

Source: The Australian - 17 February 2010
Journalist: Don Stammer

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PRIVATE Reverse Mortgages May Provide Retirees with a Solution to a Lack of Retirement Savings without Having to pay High Fees or Sign Part of the Home over to the Bank

Rather than going to a lender for a reverse mortgage, a private reverse mortgage is where a retiree borrows the money from a private lender, such as their child, to help fund their retirement.

Senior Australians Equity Release Association of Lenders chief executive Kevin Conlon says the child needs to understand the burden that they are undertaking.

"You only have to lose a job, suffer a divorce or have more children, and all the things life throws up over time, to apply pressure to your capacity to continue that facility for your parents and they certainly don't have the capacity to repay that debt early," he says.

Source: The Australian Wealth Section - 17 February 2010
Journalist: Sara Rich

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Treasury Steps Up Equity Release Review

Treasury has called for the formation of an industry consultation group to discuss the review of the equity release industry.

"SEQUAL approached the government to fast-track the review for the equity release products and to deal with equity release products as a priority," Conlon said.

"SEQUAL is confident that the existing practices within the industry are of a high standard and we believe that it is unlikely that there will be a significant regulatory change imposed on the market," he said.

"The industry has done a good job and this should be more of a health check."

Source: IFA Magazine Issue 490 February 2010
Journalist: Wouter Klijn

THREE years ago Keith and Helen Cowie faced a financial crisis: the nest egg they retired with almost 20 years earlier was about to run out.

Like a growing number of retirees in Australia, Mr Cowie, 76, considered a reverse mortgage -- where the equity in a home is used as security to borrow money -- but was concerned about whether there would be anything left in the estate for his family.

Senior Australians Equity Release Association of Lenders chief executive Kevin Conlon said home reversion schemes would suit retirees who were not optimistic that property value increases would outperform interest rate movements.

Source: The Australian -14 December 2009
Journalist: Sara Rich

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SEQUAL Admits Non-Lender into Ranks

It is the first time the association has admitted a non-lender and it had to change its statutes to make the inclusion possible.

"SEQUAL has now extended its membership to include a non-reverse mortgage, equity release product provider," SEQUAL chief executive Kevin Conlon told InvestorDaily.

"It is important that senior Australians have choices in determining the most appropriate way to release equity from their homes."

Source: InvestorDaily -30 October 2009
Journalist: Wouter Klijn

Aged-Care Maze

Aged-care facilities, such as standard-care nursing homes and hostels, require potential residents to pay an upfront bond to secure a place. High-care facilities aren't allowed to charge bonds, though there have been calls for them to be permitted to do so.

The nursing home or hostel retains the accommodation bond, earning interest on the money and slicing off a monthly "retention" amount, which the Federal Government currently caps at $299 (indexed annually). There are also a variety of daily care fees.

RBS Reverse Mortgages, which markets special loans for accommodation bonds, says bonds now range from $130,000 in regional areas to as much as $1 million in the two biggest cities. Most commonly, they come to about $300,000.

Reverse mortgages or similarly structured accommodation bond loans are an option for those who can't or won't sell the family home, Dani says.

Source: The Sydney Morning Herald and The Age -December 2009
Journalist: Lesley Parker

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New research shows that Australians are not saving enough to afford a comfortable retirement yet they are working less and spending more years in retirement than ever before.

According to the 24th AMP.NATSEM Income and Wealth Report, "Don't stop thinking about tomorrow", we now expect to spend around 20 years in retirement after age 65.  In 1909 only around half of all Australians lived to age 65.

Source: AMP Financial Services

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Rewriting The Retirement Rules

Source: SMH -Online - October 2009
Journalist: John Collett

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SEQUAL To Provide Direct Training to Advisers

The Senior Australians Equity Release Association (SEQUAL) is in discussions with four large dealer groups to provide reverse mortgage training to their advice networks.

SEQUAL's decision to provide training courses directly to dealer groups comes after a disappointing uptake of the reverse mortgage accreditation program it has run in partnership with the FPA.

Source: IFA Magazine 479 - 19 - 25 October 2009
Journalist: Wouter Klijn

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Reverse Mortgage Market Grows

Reverse mortgages have increased in popularity with older Australians, a new study has found.

According to the report by Deloitte Actuaries and Consultants, the local reverse mortgage market grew by 13 per cent over the last financial year, measured by outstanding balances after 4,950 new borrowers entered the market.

The average age of the reverse mortgage borrower is 74, the report said.

Source: Mortgage Business Online -October 2009

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According to a study commissioned by the Senior Australians Equity Release Association of Lenders, last financial year the local reverse mortgage market grew by 13 per cent, measured by outstanding balances after 4950 new borrowers entered the market.

The Deloitte study shows the main reason Australians took out reverse mortgages was to receive a regular income stream in retirement, followed by debt repayment and home improvement.

Source: The Australian - 14 October 2009
Journalist: Sara Rich

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Reverse Mortgage Settlements Slump

Senior Australians Equity Release Association of Lenders chief executive Kevin Conlon said membership of his organization fell from 11 to nine during the June half and of those seven were active lenders.

SEQUAL lobbied the Government to have reverse mortgage securitisation included in the Australian Office of Financial Management’s latest round of investment in the mortgage market but was not successful.

Source:  The Sheet - 14 October 2009
Journalist:  John Kavanagh

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Crisis Weighs on Reverse Mortgage Market - Number of Providers Falls

"We had white-label providers - that is those providers that are using products engineered by major reverse mortgage lenders - drop out in June this year," Senior Australians Equity Release Association of Lenders (SEQUAL) chief executive Kevin Conlon said yesterday at the presentation of its half-yearly survey of the market.

The credit crisis and the subsequent collapse of the securitisation market provided funding problems for non-bank lenders.

Source: Investor Daily - 14 October 2009
Journalist: Wouter Klijin

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Reverse Mortgage Market Still Growing

The reverse mortgage market continued to grow through the global financial crisis but at a slower rate than previous years, research shows.

The latest study of the Australian reverse mortgage market by Deloitte Actuaries and Consultants and industry body Senior Australians Equity Release Association of Lenders (SEQUAL) shows market growth of five per cent in the six months to June 30.

Source: The Sydney Morning Hearld smh.com.au - 13 October 2009
Journalist: Drew Cratchley

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Reverse Mortgage Market Continues to Grow

Australia's reverse mortgage market has grown five per cent in the six months to June with total outstanding funding representing $2.6 billion but the number of new borrowers has declined, a study found.

The Deloitte SEQUAL Reverse Mortgage Study found the market consisted of over 38,000 reverse mortgage facilities at the end of June.

Those that use a reverse mortgage don't appear to be over-extending their ability to re-finance. Older borrowers aged 75 or more only drew between 20 to 25 per cent of the value of their property, which compares to the 40 per cent of loan to value ratio that is available.

Source: The Financial Standard - 13 October 2009
Journalist: Michael Hobbs

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Brokers a "preferred" Channel for Reverse Mortgages

The Deloitte SEQUAL Reverse Mortgage Study released today found that in terms of outstanding reverse mortgages, loans through the broker channel increased slightly over the last six months to the 30 June 2009.

The report found that "overall the direct channel remained the most popular at 53% but the trend continued towards intermediated sales with 47% of new loans taken through brokers and planners in H1 of 2009".

Source: brokernews.com.au - 13 October 2009

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Home Advantage: Reverse Mortgages

Since 2005, the use of reverse mortgages as an investment strategy has been typically restricted to a small segment of retired workers who wanted a source of credit to fund an improved lifestyle in retirement, according to Kevin Conlon, the executive director of the Senior Australians Equity Release Association of Lenders (SEQUAL).

But with the financial crisis biting into clients’ investments, there is growing interest in the strategy from investors who need a source of credit to supplement their investment incomes.

Source: Money Management - 8 September 2009
Journalist: Benjamin Levy

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Reverse Mortgage Strategies Come of Age

Predominantly, reverse mortgage funds are being used by Australian seniors to make living on the pension less of a struggle.

According to the RBS study, the most frequent use of reverse mortgages was for home renovations and improvements – creating the double advantage of making the home more pleasant to live in, while increasing the value of the property.

Source: Money Management - 8 September 2009
Journalist:  Martin Lynch

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Government Ignoring Reverse Mortgage Story

Considering that the baby boomer generation will retire within the next 10 years and their superannuation investments have plunged, they may have no choice but to turn to the Government for help.

In such a situation, a reverse mortgage might be the right product to help retirees bridge the gap and lighten the pressure on government coffers. But the tightening credit market has left them unable to gain access to the funding they need – and the Government is not listening.

Source: Money Management - 8 September 2009
Journalist: Benjamin Levy

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ASIC Warning Frustrates Reverse Mortgage Sector

"There is clear evidence that reverse mortgages are being used wisely," SEQUAL chief executive Kevin Conlon said.

Source: IFA Magazine Issue 464 - August 2009
Journalist: Wouter Klijn

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Making Sure You Have Enough to Live on in Retirement

If you have retired or are about to do so,the 20 per cent that has been wiped off your retirement savings in the past two years could take up to seven years to recover.

Figures from Chant West show returns from median growth super dropped almost 20 per cent in the past two financial years. That would mean a $1 million nest egg two years ago would be worth only $809,970 today. A $500,000 sum would be worth only $404.985.

According to Andrew Lowe, head of technical sales strategy at ING, it would take 85 months to get back to your original sum, assuming you were relying solely on market recovery and not making any additional contributions. A 5 per cent return going forward would take 51 months to recover and a 7 per cent return 37 months.

Source:The Australian - 5 August 2009
Journalist:  Gillian Bullock

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The Rise and Rise of Reverse Mortgages

'Aged care' or 'ageing in place' are not phrases that most of us think about every day, but planning ahead now can save a whole heap of financial frustration in retirement.

Reverse mortgages are sometimes thought of as the mortgage industry's country cousin.  But given the contribution this product makes in the lending landscape, it is not a completely fair assessment. 

Source: MPA Magazine 9.8  - July 2009
Journalist: Tim Neary

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Shares on the Way Up

It was my melancholy duty last week to write a story revealing that one in four self-funded retirees had gone back to work, or were planning to, to top up their devastated retirement savings.

A significant minority were also apparently planning to sell their homes and downsize to try to free up some cash, though I would think a reverse mortgage would be more sensible for many people in this situation.

Source: The Australian - 22 July 2009
Journalist: Geoffrey Newman

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Self-funded Retirees Forced Back to Work

One in four self-funded retirees have either returned or plan to return to the workforce as a result of losses to their retirement savings, according to research by CoreData.

The group’s research found that one in two self-funded retires have lost 25 per cent or more of their assets due to the global financial crisis. As a result, retirees are being forced back to the workplace and are cutting back on spending.

Source: Money Mangement - 15 July 2009
Journalist: Lucinda Beaman

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Reverse Mortgage Lender takes ASIC to task

Comments about reverse mortgages by the chairman of the Australian Securities and Investments Commission Tony D’Aloisio were unduly negative and were based on out-of-date research, a leading reverse mortgage provider said.

The head of RBS Reverse Mortgages, Martin Lynch, said ASIC’s view of the reverse mortgage market was informed by a small number of interviews conducted over a year ago.

Source: The Sheet - 30 June 2009
Journalist: John Kavanagh

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Reverse Mortgages Put to Good Use

SENIORS who take out reverse mortgages are not doing it to spend their children's inheritance, research has found.

Home repairs and providing a retirement income supplement are the biggest reasons, says the survey by provider RBS Reverse Mortgages.

Source:  Adelaidenow.com.au - Money Feature - 22 June 2009
Journalist:  Anthony Keane

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Reverse Mortgage Abuse Claims not Directed
at Planners:  Conlon

A warning to investors by the Australian Securities and Investments Commission (ASIC) yesterday that consumers were sometimes encouraged to borrow more money than they actually needed was not necessarily aimed at financial planners and other intermediaries, according to SEQUAL executive director Kevin Conlon.

Source:  Money Management - 23 June 2009
Journalist: Liam Egan

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The Search For Income

The relationship between financial planners and debt has always been troublesome and in the realm of equity release products the story is no different.  But as the financial downturn has reduced retirees' savings and people continue to live longer, these products might have to be considered more seriously.

"The family home should be under advice," Senior Australians Equity Release Association of Lenders (SEQUAL) chief executive Kevin conlon says in a tone that reveals both passion and frustration.

Source:  IFA Magazine Issue 460 -June 2009
Journalist:  Wouter Klijn

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Research Shows Reverse Mortgages Have Been Used Wisely

New research shows that less than 10 per cent of Australian reverse mortgage holders have used the equity in their homes to pay for holidays, hobbies and luxury items.

Most said they used the money to fund necessities such as home repairs and to provide an income, according to a survey by RBS Reverse Mortgages.

Source: The Australian Business with The Wall Street Journal
4 June 2009
Journalist: Sara Rich

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Brokers Dominate Reverse Mortgage Market

Brokers and planners wrote more than half (52%) of new reverse mortgages during the last half of 2008 according to the latest six monthly study of reverse mortgage market by Deloitte and SEQUAL.

SEQUAL CEO Kevin Conlon told Lending Central "At the very early stage of the reverse mortgage market the broker channel took immediate and meaningful steps to ensure that brokers were well placed to provide reliable informaiton to reverse mortgage clients."

Source: Lending Central - 15 May 2009
Journalis: Jill Fraser 

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Mortgages in Reverse Gear

There is anecdotal evidence that more senior Australians have asked about reverse mortgages in the past four months, according to the chief executive of the Senior Australians Equity Release Association of Lenders, Kevin Conlon.  Current data only extends to December 2008

A majority of loans made in 2008 were taken as a lump sum, and with interst rates at historically low levels, nearly 90 per cent of loans had variable interest rates, compared to just 60 per cent in 2007.

About 10 per cent of loans are fully repaid every year, according to Deloitte, but less than 1 per cent end because a borrower dies or enters aged care.  Most end because a house is sold or the owner volunteers a full repayment.

Source: The Age -4 May 2009
Journalist: Lucy Battersby

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Reverse Mortgage Specialists Seen Doubling

SEQUAL currently has about 1,400 reverse mortgage certified specialists consisting of mainly  brokers.

"I hope to see that number double in size next year and for it to better represent planners as originators and settlers of these deals," SEQUAL chief executive Kevin Conlon Conlon said.

"We only launched our planner training program in August last year and the Financial Planning Association is committed to rolling that program out," Conlon said.

Last Friday, SEQUAL published a survey conducted by Deloitte Actuaries and Consultants on the growth of the reverse mortgage market in Australia.

Outstanding loans have grown from $2.02 billion at the end of 2007 to $2.48 billion at the end of 2008, an increase of 23 per cent. 

But the settlements of new loans continued to slow, decreasing 28 percent from $195 million at the end of 2007 to $141 million at the end of 2008.

This trend was already noticeable in the first half of 2008, when settlements declined 34 per cent from $271 million at the end of 2007 to $180 million at the end of June 2008.

Conlon said this reflected the shift in client attitudes from "desire-based" to "needs-based" borrowing.

Source: InvestsorDaily -4 May 2009
Journalist: Wouter Klijn

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Financial Planners Need to Learn About Reverse Mortgages to Benefit Clients

Financial planners need to extend their knowledge of reverse mortgages to cater for clients who are moving into retirement and need access to equity in their home, according to Kevin Conlon, CEO of SEQUAL.

A growing number of self-managed super fund retirees and clients are also using reverse mortgages to diversify their risk, under the advice of their financial planners.

Source: Money Management -4 May 2009
Journalist: Benjamin Levy

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Reverse Logic

More seniors are taking out reverse mortgages to pay off debts and secure an income in retirement, a study shows.

Kevin Conlon, chief executive of the Senior Australians Equity Release Association of Lenders, said the association was backed by the major banks and non-bank lenders.

Source: WA Sunday Times -3 May 2009
Journalist:  Noel Whittaker

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More Seniors Sign for Reverse Mortgages

Chief executive of the Senior Australians Equity Release Association of Lenders (SEQUAL) Kevin Conlon said the funding of reverse mortgages was becoming more challenging given the financial market conditions.  However, SEQUAL was backed by the major banks and non-bank lenders that were well palced to meet the funding demands for the sector, he said.

Source:  Brisbane Times, The West Australian, the bull.com.au online -1 May 2009
Journalist: Alison Bell

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The Senior Australians Equity Release Association of Lenders (SEQUAL) is calling for the reverse
mortgages (RM) sector to be included in the Federal Government’s $8 billion emergency support measures for the Australian financial system.

Source: Money Management - 15 April 2009

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How to Avoid an Unlucky Break

Some retirees who want to sell their homes face big break fees on their Reverse Mortgages.  These are the mortages available to home owners 60 and over who need to access some of the cash in their homes.

Source: Sydney Morning Herald - 15 April 2009

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Draw Down Relief to Boost Reverse Mortgages

The Federal Government's announcement that it would give a 50% cut to the minimum account-based pension draw-down will lead to an increase in Reverse Mortgage Activity, the National Information Centre on Retirement Investments (NICRI) has said.

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Note:  Cannex's remarks regarding the reverse mortgage have been withdrawn.

Click here for a complete list of SEQUAL Members.

SEQUAL CEO -Kevin Conlon Career Profile

Kevin Conlon has made a habit of being the first to join in on the next big thing. And this is the way he thinks of the reverse mortgage industry, the latest sector he has chosen to throw himself into.

With more than 30 years' experience in the financial services industry, the first chief executive of the Senior Australians Equity Release Association of Lenders (SEQUAL) has always worked in fast-growing areas at the cutting edge of technology, product and regulatory development.

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Boomers and Beyond -Equity Release Clients & their Children

The largest generation within the Austalian population are now aged between 45 and 60. Many of them are poorly prepared for retirement and arrive at the end of their working life "Asset Rich but Cash Poor".

"The recent changes to super rules combined with innovative products that allow access to equity in the family home through Reverse Mortgages provide Financial Planners with a range of strategies to assist their Baby Boomer clients", states Kevin Conlon, CEO Senior Australians Equity Release Association of Lenders ("SEQUAL").

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