Deloitte Reverse Mortgage Survey December 2013

Transcription

1 Deloitte Reverse Mortgage Survey December 2013 James Hickey Financial Services Partner [email protected]

2 Contents 1. Market Volumes & Mix 2. Housing Splits 3. Borrowers 4. Summary Deloitte Touche Tohmatsu

3 Market Volumes & Mix

4 Size of the market: Outstanding loans (31 December 2013) Outstanding Loans (#) Currently over 40,000 reverse mortgages on issue in Australia $4000m $3500m $3000m $2500m $2000m $1500m $1000m $500m $m Outstanding Loans ($) Total loan book size of $3.6b Negligible growth in 2013 Average loan size $86,000 (up from $84,000 in 2012) Deloitte Touche Tohmatsu

5 Size of the market: Settlements (12 mths to 31 December 2013) Settlements: Drawdowns v Facility ($) $800m $700m $600m $500m $400m $300m $200m $100m Total drawdowns Total Approved Facility 2013 Settlements $302m 4,300 new borrowers in 2013 Average settlement $71,000 $m This measures the volume of new lending written over It shows both drawn funds from new advances as well as approved facility Deloitte Touche Tohmatsu

6 Settlements: Payment type Lump Sum v Income Stream Settlements: Lump Sum v Income Stream ($) $600m $500m $400m $300m Of the $302m Settlements in 2013: o 94% were lump sum o 6% were income stream $200m $100m $m Income Stream Lump Sum The proportions of lump sum and income stream settlements have been relatively stable since 2008 Note : Income Stream relatively low take up impacted is due to more flexible product options such as line of credit allowing discretionary income draws rather than contractual Deloitte Touche Tohmatsu

7 Interest rate type $4000m $3500m $3000m $2500m $2000m $1500m $1000m $500m $m Outstanding: Fixed v Variable Interest ($) Fixed Loans $ Variable Loans $ Outstanding Loans 90% of all loans outstanding are variable interest Fixed interest loans are on average $14,000 more than variable loans 100% 80% 60% 40% 20% 0% Settlements: Fixed v Variable interest ($) Fixed interest loans Variable interest loans Settlements Vast majority of reverse mortgage lending has variable interest rate for the borrower Fixed interest reverse mortgage lending remains negligible. This is consistent with the settlement history since Deloitte Touche Tohmatsu

8 Channel Outstanding: Channel ($) Outstanding Loans 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Direct Brokers Financial Planners 73% of outstanding loans were written direct by lenders Broker channel peaked in 2009 at 50% and has reduced to only 25% since Settlement: Channel ($) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Alliance Direct Brokers Financial Planners Settlements Direct (including branch) lending largest channel at 77% Average settlement size o $100,000 Brokers & Planners o $068,000 Direct Deloitte Touche Tohmatsu

9 Loan-to-Valuation Ratio (LVR) 30% LVR on settlements: Actual vs Max by Age Settlment $ $100,000 Average Settlement Loan Size by Age Band 2013 # # of loans 1,200 25% $90,000 $80,000 1,000 20% 15% Actual LVR Max LVR $70,000 $60,000 $50, % 5% 0% < $40,000 $30,000 $20,000 $10,000 $- < Younger borrowers still utilising larger proportion of available facility o average of 17% LVR for those under 65 (close to maximum available) o average of 23% LVR for those over 80 (maximum available up to 35%) Average amount borrowed (for settlements) is similar across ages with an increase for those over Deloitte Touche Tohmatsu

10 Additional Drawdowns $140m $120m $100m $80m $60m $40m $20m $m Additional Drawdowns: Income vs Lump Sum ($) * Income Stream Lump Sum 1 in 20 borrowers make additional draw downs on existing loans These additional drawdown (ADD) include both lump sum payments via line of credit and regular income instalments. % Borrowers making ADDs (12 months) 5% Average size of ADD (12 months) $23,000 ADDs as % total $ outstanding loans 1% p.a. for 2013 Total ADDs in 2013 $47m *Classification of Additional Drawdowns changed from Deloitte Touche Tohmatsu

11 % p.a. % p.a. Discharges 14% 12% 10% 8% 6% 4% 2% 0% Full Discharges as % Total Outstanding Loans (#) By # borrowers Full discharge rate of 12.1% In addition to this, about 2.1% made partial discharges in 2013 There was a noticeable increase in discharges across the board in % 12% 10% 8% 6% 4% 2% 0% Full Discharges as % Total Outstanding Loans ($) By $ discharges Full discharges 12.5% p.a. Partial discharges 1.7% p.a. Average discharge size (2013): o Full discharges = $88,500 o Partial repayments = $69, Deloitte Touche Tohmatsu

12 Market movers: by numbers 4,300 # Settlements ,300 # Discharges ,500 # Loans Dec ,500 # Loans Dec Deloitte Touche Tohmatsu

13 Market movers: by amounts $47m Additional Drawdowns 2013 $155m* Interest 2013 *Deloitte extrapolation $504m Discharges 2013 $302m Settlements 2013 $3.56b Market Dec 2012 $3.56b Market Dec Deloitte Touche Tohmatsu

14 Housing splits

15 Location: State Outstanding: State Location (#) QLD 19% WA 13% SA 6% TAS 3% NT 0.1% ACT 1% VIC 21% NSW 37% Outstanding National presence Broadly aligned to population Most reverse mortgage business in NSW (37%), followed by VIC (21%) & QLD (19%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Settlements: State Location (#) ACT NT TAS WA SA QLD VIC NSW Settlements NSW the largest (34%) o VIC (28%) & QLD (18%) o WA (8%) o SA (6%) Deloitte Touche Tohmatsu

16 Location: Capital city v Regional Outstanding: Capital v Regional (#) Settlements: Capital v Regional (#) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Regional Capital cities 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Regional Capital cities Around 77% of loans outstanding are in capital cities o Larger regional areas in NSW and QLD led growth of non-metro lending However, recent settlements around 88% in capital cities Deloitte Touche Tohmatsu

17 Housing Outstanding: Property Type (#) Apartments 13% Outstanding Outstanding loans secured by houses remained most common 99% loans for owner-occupiers o (1% investment properties) Houses 87% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Settlements: Property Type (#) Apartments/Other Houses Settlements Houses made up 82% of settlements in 2013 Lenders willing to accept units and other property types outside of stand alone dwellings in capital cities Deloitte Touche Tohmatsu

18 Borrowers

19 Borrower: status Outstanding: Status (#) Single Male 17% Couple 47% Outstanding Couples remain the dominant segment followed by single female Average loan size consistent across all categories of borrower Single Female 36% Single Female 28% Discharges: Status (#) Single Male 8% Couples 64% Discharges Proportionately larger discharges by couples. Could imply greater use of the product for lifestyle reasons by younger, active couple retirees Deloitte Touche Tohmatsu

20 Borrower: age band Outstanding: Age (#) % <65 9% % Outstanding Major age segment is (48% of loans by #) Average age of existing borrowers is % % 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Settlements: Age (#) <65 Settlements Average age of new borrowers is 75 Fewer under 65 year old borrowers since GFC Age profile stable since Deloitte Touche Tohmatsu

21 Use of proceeds Consistently in the top 3 uses of settlements are regular income, debt repayment and home improvement Other uses are also popular (eg travel, car purchase), however these are often done in combination with one of the above. Settlements: Use (#) Home Improvement 1/7 Debt repayment 1/3 Income (regular) 1/2 Note: Figures still indicative due to lack of completeness of data Deloitte Touche Tohmatsu

22 Discharges 14% 12% 10% 8% 6% 4% 2% 0% Discharge: Reason ($). Refinance Sale of Property Voluntary repayment Aged care entry Death Discharges v Reason Full discharges (by $) were 12.5% p.a. Of this: o Mandatory repayment 1% p.a. (i.e. death, move to aged care) o Voluntary repayments 2.5% p.a. o Sale of property 4.5% p.a. o Other (eg refinance) 4.5% p.a Deloitte Touche Tohmatsu

23 Summary Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Outstanding market size $1.51b $2.02b $2.48b $2.71b $3.01b $3.32b $3.56b $3.56b Number of loans 27,898 33,741 37,530 38,788 41,640 42,410 42,455 41,435 Average loan size $54,233 $60,000 $66,150 $69,896 $72,474 $78,249 $83,840 $85,881 Settlements $520m $466m $321m $264m $322m $317m $305m $302m Facility (settlements) $714m $627m $426m $367m $449m $426m $385m $404m Additional drawdowns N/A $125m $116m $126m $131m $73m $65m $47m Discharges N/A $203m $253m $309m $354m $338m $350m $504m Key Statistics: Market (by $ outstanding) has remained flat in the 12 months to December 2013 Some 4,300 new borrowers took out a reverse mortgage in 2013 Full discharge rate of 12.1% p.a. (mainly sale of property and voluntary repayment) Additional Drawdowns approximately 1.3% of outstanding loans Lump sum most popular drawn down type Brokers & Planners settlements channel 22%, Direct channel 77% Proportions of Outstanding loans by #: NSW 37% of market, VIC 21% & QLD 19% Deloitte Touche Tohmatsu

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