1st of December 2015
Productivity Commission Report - Debt Free Equity Release set to play a greater role in retirement incomes
MEDIA RELEASE – 1st of December 2015
Debt Free Equity Release set to play a greater role in retirement incomes
One of Australia’s largest providers of seniors home equity release products, Homesafe Solutions Pty Ltd, today welcomed a new Productivity Commission report that found equity release could offer a better standard of living for older homeowners.
Homesafe General Manager, Dianne Shepherd, said the report highlighted that most of the wealth of older Australians was tied up in the family home, which the Commission described as an “untapped source of retirement income”.
“We have been arguing for a long time that stored home equity must be considered as a genuine option for older homeowners to ‘self-fund’ their retirement. As Commissioner Karen Chester has previously observed, the retirement income system comprises of three 'buckets' - the Age Pension, second Super and private savings and third the family home.
“While we welcome the report, we are more optimistic of the potential for equity release to play a much larger in meeting the retirement income needs of older Australians in the future.
“Homesafe Wealth Release, as an alternative to reverse mortgages and downsizing, is continuing to grow in popularity amongst retirees.
“Since our launch a decade ago, we have helped thousands of customers to unlock the wealth in their homes when they need it most.”
Ms Shepherd said the growth of Homesafe Solutions Pty Ltd proved that equity release could win strong market acceptance if providers were innovative and responded to customer preferences for equity release from the family home without going back into debt whilst protecting the right of the customer to remain in their home for life.
Ms Shepherd also said it was pleasing to see the Commission highlight that older Australians preferred to age in their own home, and that this should be a key consideration when financing retirement income and aged care needs.
“The property industry has advocated very strongly on behalf of downsizing, which many older homeowners have come to mistakenly see this as their only option for releasing equity from the home.
“Unfortunately, downsizing can result in older homeowners moving from ‘land rich’ properties to ‘dwelling rich’ developments, ultimately downsizing the size of their home but not the value of their home, and releasing little equity as a consequence.
“With limited options to purchase a new dwelling within the vicinity of their family home, resulting in a loss of known services and a move away from the community they know, downsizing can have a negative impact on their way of life,” Ms Shepherd said.