It was,and it was the catalyst for the huge growth HGH have enjoyed in the sector.
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You are both right. The Australian pension loan scheme has been operating for a while, and since that time Heartland has benefitted. The link below
https://www.dss.gov.au/sites/default..._2021_1000.pdf
refers to a modification of the existing scheme. Under the original scheme paramenters:
"the amount of loan you get each fortnight. This amount can be up to 1.5 times the maximum payment rate of your eligible pension each fortnight."
The amended version (from 01-07-2022) says that Australian seniors, -who do not automatically qualify for a pension because it is means tested-, can borrow against their house the same amount of money as before. But the maximum they can get paid out on any one date goes up from $952.70 x 1.5 = $1429.05 (for a single person) to
"Based on current Age Pension rates, a single person would be able to receive lump sum payments of up to around $12,385 per year, while couples combined could receive up to around $18,670. The total amount of pension plus loan available will still be capped at 150 per cent of the maximum rate of Age Pension, so any advance taken will reduce the maximum fortnightly loan amount a person can take over the rest of the year."
The total amount that can be accessed under the government system has not changed. What has changed is that the lump sum that can be with drawn at any one time goes up from $1429.05 to $12,385 (for a single person). Where as before the government REL loan was a more complementary product to the Heartland REL lump sums available, this new maximum expanded lump sum is definitely overlapping with Heartland's target market. That is the way I see it.
If you need the 'fortnightly income' and a 'lump sum', then Heartland is very much still in the REL picture.
SNOOPY
Am I the only one who finds that government plan capped at a very low amount? I thought most reverse mortgages were for much larger amounts in the 6 figure range.
Quick google discovers the average reverse mortgage size in Australia is $118,627.
nah they are limited in value because of those guarantees that are in place such as never kicking them out etc.. which means they cant lend too much in case the person lives to 108
The scheme has been boosted in their recent budget, I think the Australian Pension Loans Scheme has raised awareness for the whole sector, which is good for HGH too.
However I think it also does raise the issue of means testing pensions, with owner-occupying housing being part of the asset test and with an estate duty being brought into the mix. If some people want a boost to their pension, then the quid pro quo is that their estate is reduced.
It seems a sensible development in our current situation of having very low interest rates and very expensive real estate, which often is by far the largest asset for a retired person, whose extra income from fixed interest is now tiny.
Ironically however, I think the Australian Pension Loan Scheme in effect will not levy this quasi estate duty on the wealthiest Aussies as they will less likely need a pension boost.
There is an analysts dilemma when trying to make sense of 'average' numbers. If there is a cluster of loans at $18,000 and a cluster at $218,000, then analysing what might happen to an average loan of $118,000 is not really a useful exercise.
The most thorough assessment I have seen on Heartland's REL business in Australia is in the 19th November 2018 investor day presentation. Slide 21 tells us the 'average' REL loan for Heartland Australia is $120,000, leveraged at 25% of the house value. But the same slide tells us that -at initiation- the average LVR was 12%, let's say $60,000. Effectively what that slide is saying is that with the average REL holder, only half of the money they owe is capital borrowed. The other half is 'deferred interest'. That means the average initiated loan is only $60,000. And that may be made up of a cluster of loans at $12,000 and another cluster at $108,000.
($12,000 + $108,000) / 2 = $60,000 average
Slide 29 shows the use these loans are put to include: Renovations, travel, medical expenses , car, aged care , debt consolidation, mortgage refinance, support next generation, everyday bills......
It would be the lower 'lump sum' cluster of loans $12,000 that Heartland are at risk of losing. You could do up a kitchen, or bathroom for that. You could have a decent holiday within Australia. You could get some lesser medical procedures done: a cataract operation, a set of hearing aids. You could probably refinance an outstanding credit card debt too. You could buy a good reliable second hand car.
However, you could not do up your kitchen and your bathroom. You could not buy a new car. You could not do a 'world trip'. You could not get a hip operation. So there is still a good window of opportunity there for the likes of Heartland offering REL loans to those wanting something 'that little bit more' than the basics.
On reflection, my forecast of a $7.4m 'net effect' fall off in profit from these latest Aussie budget measures may be a little high. And that 'fall' doesn't take into account the underlying growth whereby even if no new net loans are written, the receivables balance will still grow at an underlying 5.6% per year. Yet I do take the 4.5% Australian Government loan rate as a signal that 'the market' (and Heartland) are being a little greedy with their REL loan package in the post Covid-19 low interest rate environment.
SNOOPY
I doubt whether the Sydney person who took out an REL loan of $1mil with HGH would have been approved by the Aussie Govt.
[may have been $2mil].
Mary Holme talking about reverse mortgages…RNZ
Been making some steady progress lately which is nice. $2 sometime in the next month or two ?
Has Laura the Chief Operating Officer picked the TOP
Selling at 1.93
http://nzx-prod-s7fsd7f98s.s3-websit...349/347629.pdf
No she hasn't. Someone else picked the top ages ago at $2.14 under the other ticker handle and that's when earnings were only about two thirds of what they are now. I reckon we're going over that in due course and this time based on much higher earnings, they're worth all of that.
Are the circumstances and management style currently facing HGH the same as what faced ATM?
There is only the one insider sale of HGH (so far). Looking at the details in the document, she is in joint ownership with another person (her husband?) Maybe the other owner needed funds.
The previous insider trade was for a (smaller) purchase in April.
HBL/HGH was around $2.20 at the peak before the restructure a few years ago.
1.95 @ today's close is my prediction.