Joshua Funder

Key points:

•  It is critical to change the narrative on the role of the home in retirement.
• The Actuaries Institute believes unlocking 20 percent of the $1.3 trillion in
  housing wealth would deliver retirees an extra $260 billion to help fund another
  25 or 30 retirement years. The means to unlock this wealth is now available,
  comes with strong, well-validated consumer protections and can help Australia’s
  retirees live well at home.
• Household Capital urgently calls for improved national awareness of responsible
  long term access to home equity wealth for all homeowners 60+ years old.

Household Capital, a leading Australian provider of home equity retirement funding, has
welcomed the Actuaries Institute report More than Just a Roof: Changing the Narrative on
the Role of the Home.

Dr Josh Funder said, the home provides housing and age-appropriate accommodation,
retirement funding and access to wealth as well as community and connectedness. Further,
it’s the preferred place for ageing in place and in-home care.

“It provides housing and age-appropriate accommodation, retirement funding and access to
wealth as well as community and connectedness. Further, it’s the preferred place for ageing
in place and in-home care.”

Australia has established world leading national infrastructure relating to home equity
access.

• The federal government’s Retirement Income Review (2020) includes home ownership
  with private savings as the third pillar of retirement funding.
• Australia has world leading consumer regulation and protections for reverse mortgages
  enshrined by the National Consumer Credit Protection Act 2012 and validated by the
  2018 ASIC Review of reverse mortgages.
• The federal government’s Home Equity Access Scheme provides limited access to
  home equity for long term retirement funding.

Household Capital urgently calls for improved national awareness of responsible long term
access to home equity wealth for all homeowners 60+ years old.
“Home equity needs to be positioned alongside the government pension and entitlements,
as well as superannuation, to deliver genuine access to wealth and confidence in
retirement”, said Funder.

Firstly, most customers access their home equity to remain in their home an average of eight
years. Discharge is overwhelmingly voluntary, there are no break fees. Secondly, downsizing
is the principal cause of reverse mortgage discharge. In other words, there is no false trade
off between accessing home equity and downsizing. Finally, customers use home equity to
be the bank of mum and dad when it’s most needed; this is available in addition to preserving
a significant bequest in home equity.

“We need broad awareness and market neutrality to scale the $300 billion national
opportunity identified in the Actuaries Institute report,” said Funder.

Household Capital believes there are several key difficulties to be overcome so as to change
the national approach to retirement savings. These are:

• Awareness, not delivery, of home equity products as part of the retirement income
  covenant, financial advice strategies, mortgage broker product options and direct to
  consumer communications.
• All home equity access products to be equally well regulated, to provide transparency
  and consumer protections. This includes the Home Equity Access Scheme to be
  regulated as a credit product and reversion contracts to be separately regulated by
  ASIC.
• The Home Equity Access Scheme to be structured and priced to scale sustainably,
  indexed along the same lines as the HECS-HELP student loans.

The Actuaries Institute believes unlocking 20 percent of the $1.3 trillion in housing wealth
would deliver retirees an extra $260 billion to help fund another 25 or 30 retirement years.
The means to unlock this wealth is now available, comes with strong, well-validated
consumer protections and can help Australia’s retirees live well at home.

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Joshua Funder

Household Capital, a leading Australian provider of home equity retirement funding, has been announced as a state finalist in the Telstra Best of Business Awards 2023. The awards recognise outstanding businesses across various industries and regions throughout Australia.

Being named a state finalist is a significant achievement for Household Capital, which has been providing innovative retirement funding solutions for older Australian since its launch in 2019.

The Telstra Best of Business Awards are widely regarded as one of the most prestigious awards in the Australian business community. They recognise exceptional business practices, innovation, and community engagement across a broad range of industries. The awards are judged by a panel of experts from different industries who evaluate the nominees based on their business model, financial performance, customer service, and community impact.

Household Capital has been recognised for its innovative approach to retirement funding. Commenting on the award, CEO Dr Josh Funder said, “Home equity retirement funding plays a critical role in meeting the needs of an ageing population.”

“We were delighted that our innovations have once again been recognised by the Telstra Best of Business Awards.”

Drawing on home equity provides older Australians with flexibility and choice. It provides them the opportunity to get themselves ‘retirement ready’: financially, by refinancing an existing mortgage or other debt, or renovating their home to live comfortably and safely at home. Importantly, during times of market volatility, retirees can draw on home equity rather than income producing assets, preserving the longevity of those assets.

“Home equity can provide funding, wellbeing and housing in retirement,” said Dr Funder.

“It is increasingly becoming an important component of total retirement savings, alongside superannuation and the Age Pension.”

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Joshua Funder

Household Capital is delighted to have ranked #2 in the AFR BOSS Most Innovative Companies awards, in the Banking, Superannuation & Financial Services Industry. The specialist retirement funding provider came second to global finance giant, Visa.

The entry from Household Capital focused on its CX2.0, a redesigned customer experience software designed to deliver older Australians awareness and understanding of their home equity and how it can be used – alongside any superannuation and pension entitlements – to enhance their retirement lifestyle.

“A house is not just housing, it can also provide ‘funding for life’. That’s the central tenet of Household Capital’s Customer Experience 2.0 technology. It allows customers to access scenarios showing how much they can get from their home equity, how much they can access now and how much they could access in the future. That’s coupled with purpose-based lending, for things like renovating a home or funding aged care. “[Customer Experience 2.0] delivers awareness, understanding, access and trust.”
Dr Josh Funder, CEO, Household Capital

One of the questions we were asked as part of the award submission was “To what extent do you think the innovation changed people’s lives?”

Our response was to describe cases where our innovation actually transformed individual customer outcomes – we believe this truly demonstrates our impact. The examples we provided include:

• adding $1,000 per month of reliable, long term income to take a retirement from basic to comfortable
• providing access to capital to cover unexpected expenses
• paying out a mortgage for a 64 year old who lost his job due to COVID
• renovating a home to make it age appropriate for single women who don’t have access to capital or credit
• replacing ageing vehicles, to ensure mobility and access to services
• funding a range of medical needs, in-home care and meeting the high costs of residential aged care.

We’ve been working with an increasing number of financial advisers whose clients need access to capital or an increased retirement income stream. Home equity can be of particular benefit during periods of volatility in financial markets, so investors can minimise their drawdowns on income producing assets impacted by these dislocations.

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Josh Funder

Household Capital welcomes last week’s release of the Retirement Income Review. Household Capital is Australia’s leading provider of home equity retirement funding. Since launching in 2019, HouseholdCapital has seen a rapid adoption of their services, with over 50 times year on year customer revenue growth.

Dr Joshua Funder, Chief Executive Officer of Household Capital, applauded the Retirement Income Review’s support of house equity access for Baby Boomers. He said, “For most Baby Boomers, voluntary savings outside of superannuation means the equity in their home. Australian homeowners entering retirement today only started to accrue three percent superannuation halfway through their working lives – it’s simply not enough to fund more than 25 years in retirement. Available home equity can double the amount of their superannuation and help fund their retirement. Accessing home equity can offer a responsible, long-term solution to allow current retirees to boost their retirement funding.”

Australia leads the world by including home equity as the third pillar of retirement funding

The findings of Treasury’s Retirement Income Review show that Australia leads the world in
establishing home equity as the third pillar of retirement funding. The federal government has
established clear principles according to which Australian retirees can voluntarily improve self-funded retirement outcomes by complementing government benefits and superannuation with access to the $1trillion home equity they have already saved.

Household Capital supports the report’s statement that “Housing is an important component of
voluntary savings for most people and a major determinant of their retirement outcomes… The home is also an asset that can be drawn on in retirement.”

National awareness needed

“We need to help Australians understand how they can significantly make the best use of their
retirement savings, including the equity in their homes” the report said.

The Retirement Income Review clearly identified lack of awareness of home equity retirement funding options available to Australian retirees as a key challenge in ensuring adequacy of our national retirement funding system, stating that there is a need to better help Australians understand how they can significantly maximise their retirement savings, particularly in accessing equity in their homes as many retirees don’t realise the enormous potential to unlock voluntary savings through their home.

“Home ownership is an integral part of Australian wealth creation and it should also be widely
available for Australians to voluntarily draw on their wealth to fund their retirement. We have the
technology to efficiently deliver home equity retirement funding across Australia. The key is to
establish national awareness of the opportunity to make the family home both the best place to live
and the right way to fund retirement.” said Funder.

Recent academic research into the home equity funding market by the UNSW Centre for Excellence
in Population Aging Research (CEPAR) indicates that over 80 percent of Australians are aware that
their home is a significant asset to fund retirement, 43 percent of retirees are open to accessing their home equity to fund retirement and they would draw 13 percent of their home equity to do so.

Importance of home ownership in retirement

The Retirement Income Review clearly set out the multiple roles of the family home in retirement; it provides security, housing and a source of retirement funding, stating, “This report highlights the
importance of home ownership in achieving security in retirement such as removing the need for
income to pay for rental accommodation and providing an asset that can be drawn on to supplement retirement income.”

‘Australian retirees are worried about their lives. Providing adequate, secure long term funding,
including access to home equity, can give our senior citizens confidence in the future” Funder said.

Major opportunity to improve retirement outcomes

The Retirement Income Review report identified the major yet-to-be realised potential role for home equity to complement the pension and superannuation in providing retirement funding stating: “Home owners also have the opportunity to access the equity in their home to supplement retirement income and manage longevity risk, although few currently do so. If this potential were realised, housing would take on an even more important role in the retirement income system.”

“This is a massive opportunity to improve retirement outcomes,” said Funder. “Australian retirees
enjoy extended longevity – a couple at 65 years old need to plan for 30 plus years in retirement.
Around 75 percent of Australian retirees have a strong intention to remain at home throughout
retirement and do not want to downsize. There is growing pressure on both the government and
individuals to fund in-home care as well as aged care. Collectively, Australian retirees own over
$1trillion in home equity; at retirement, median retirees have saved around $200k in superannuation and over $700k in home equity.”

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Josh Funder

Retirees facing financial shortfalls will be able to apply for accelerated access to draw on their home equity, after independent specialist retirement funding provider Household Capital overhauled its product features and application process to meet the needs of senior Australians during the COVID pandemic.

Household Capital has announced the launch of its Home Income, a regular drawdown on home equity to allow retirees to maintain their retirement lifestyles. It’s also offering a rapid access $20,000 Top Up home equity offer to deliver financial assistance more rapidly to those retirees hit hard by the global economic downturn.

It’s been a challenging time for advisers dealing with retiree clients; many clients have faced a sudden loss of retirement income due to falling dividends, term deposit rates and rental income. At the same time, shrinking super balances run the risk of failing to recover in the future if drawn on too heavily.

Household Capital’s home equity offer provides retiree clients with a Home Income regular draw down or $20,000 Top Up quick cash injection to deliver a financial boost for those facing hardship.

Chief executive Josh Funder said advisers didn’t want their clients to draw money from super in this environment, although for some, there seems little alternative.

“We know self-funded retirees are doing it tough and facing reduced incomes due to shrinking super balances and investments,” he said.

“The Government stimulus package focused on working Australians and while the banks have provided interest repayment holidays, none of that has helped retired Australians get through the crisis.”

Applications for both Home Income and the $20,000 Top Up will be fast tracked, with the funds typically available within two weeks. Regular interest repayments are not required, and applicants can pay back the money at any time without financial penalty.

“We don’t want people to have to wait – they need that money now,” Funder Said.

“Smaller loans like these are not profitable to originate in a business sense, but we view it as a service to make sure Australian retirees have access to their savings when they really need them.”

Home equity can be an important source of retirement funding for clients when other types of income are diminished. It’s a practical option when you consider many Australian retires have as much or more saved in their family homes as in their super or other investments.

“We have experienced a surge in inquiries from advisers in the last couple of months; self-funded retiree clients need an alternative source of income,” Funder said.

“For retired Australians, their homes can be both the best place to live and the best way to fund their retirement.”

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Luke Rattigan

Household Capital, an independent, specialist retirement funding provider has announced it has further expanded its team. On the back of strong growth and following the recent appointment of a Customer Operations Manager, Household Capital has added two specialists in operations and risk management.

Luke Rattigan has been appointed to the newly created role of Chief Operating Officer, with a primary focus to scale the business for further growth. He will be responsible for ensuring the right  processes, people and planning are in place as Household Capital looks to grow and launch new services to help Australia’s retirees access the retirement funding they need for a comfortable lifestyle.

Luke joins Household Capital from consumer electronics start-up Nura, where as Chief Commercial Officer he oversaw the implementation of a new business model to disrupt the headphones industry. His background also includes senior roles as COO at Sportsbet, as well as RELX (formerly Reed Elsevier) and as an economist for the Productivity Commission.

Commenting on his appointment, Luke said, “I’m excited to work for a business that is solving a real problem for an important cohort of Australians – helping Australians be better off in retirement.”

Josh Funder, Household Capital’s CEO, commented, “Luke brings demonstrable experience in scaling new and innovative businesses.”

Chris Bishop has worked with Household Capital as a consultant since 2018 and is responsible for implementing the stringent credit management policy framework within which the business operates. He was recently appointed Chief Credit Officer on a full time basis, and will continue to provide credit policy and procedures development, implementation and management, as well as credit approval authority.

Chris is a qualified lawyer, with specialisation in credit and risk management. He has held a number of senior legal, company secretary and line management roles. He was the first to hold the new role of Head of CBA Retail Bank Compliance, is a previous Director Legal Australian Bankers’ Association and previous Head of Credit for Telstra.

Commenting on his ongoing role Chris said  “Delivering ‘Live Well at Home’ solutions for senior Australians is hugely rewarding.  Household Capital is leading the way in providing responsible access to long-term home equity retirement funding.  We are able to provide high quality credit to retired Australians throughout their retirement and meet a major unmet need.”

Commenting on Chris Bishop’s appointment, Josh Funder said, “With superannuation and investment portfolios decimated, and dividends and term deposits at all-time lows, Australian retirees need help to fund their retirement.”

“We are delighted Chris has agreed to join us on a full time basis. His expertise will help us to continue delivering innovative solutions to provide Australians with flexibility and choice in retirement, and importantly the confidence to Live Well At Home.”

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Danny specialises in the development of mobile apps and digital platforms, as well as providing strategic advice to businesses. He is a founder, investor and currently CEO of Snap Send Solve, a technology platform that simplifies the reporting of issues to local councils in Australia and New Zealand.

Danny also co-founded Outware Mobile (outware.com.au), Australia’s leading mobile app developer in 2009. Outware develops apps for a number of ASX-100 companies, including ANZ, Coles, NAB, NIB, Qantas, RACV, Seek and Telstra. He sold Outware to Melbourne IT in 2015.

An active investor in early stage start-ups, Danny is currently a director and board member of Melbourne Symphony Orchestra, a director of ASX-listed DWS Group and a trustee of the Telematics Trust.

Josh Funder, Household Capital’s CEO, commented, “Danny brings Household Capital superb entrepreneurship and technical focus.”

“We use a digital platform to fulfil our longstanding mission to help Australians Live Well At Home and deliver home equity as a core part of Australian retirement funding.”

“Danny’s appointment will provide a strong resource and sounding board for our tech team to draw on.”

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Jay Sewell has joined Household Capital from UK-based Age Partnership, a leading provider of home equity funding. Jay held the role of Head of Retirement Funding for eight years, during which time he oversaw significant business growth, with Age Partnership taking a 28 percent share of the UK’s £3 billion per annum market. Jay played a key role in helping the UK equity release market achieve six years of double-digit growth as the UK’s fastest-growing credit sector.

In his newly created role, Jay will lead Household Capital’s customer operations to support distribution and work closely with the technology, credit and customer service teams to deliver the best customer experience and help the business achieve its operational and strategic objectives.

Commenting on his appointment, Jay said, “When I first met with Household Capital, I felt a real and genuine connection to the people within the business, the business itself and its vision.”

“I am genuinely excited to be part of such an innovative and forward-thinking business that is at the forefront of the retirement market, stands with Australians and delivers improved retirement funding.”

The UK equity release market is significantly more developed than its Australian equivalent. In 2019, nearly £4 billion of housing equity was accessed by older homeowners. Earlier this year, Legal & General, one of the largest providers of equity release products in the UK, took an equity stake in Household Capital, citing Australia as a market with lots of potential.

Josh Funder, Household Capital’s CEO, commented, “Jay brings demonstrable experience in building a client service capability designed to delight clients. Australian retirees have saved $1 trillion in home equity.”

“With superannuation and investment portfolios decimated, and dividends and term deposits at all-time lows, Australian retirees need help to fund their retirement.”

“Household Capital’s longstanding mission is to help Australians Live Well At Home and deliver home equity as a core part of Australian retirement funding.”

“Jay comes to Household Capital having been a leader in building a 600-strong business and his team was awarded the ‘Number one net promoter’ score across UK financial services companies; we look forward to learning from his insights and working with Jay to deliver quality retirement funding solutions to our customers as the business grows.”

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Josh Funder

Household Capital, an independent, specialist retirement funding provider has completed its submission to the Retirement Income Review in response to the government’s consultation paper released in November 2019.

The purpose of the Retirement Income Review is to ascertain the degree to which retirees are supported by the three pillars of Australia’s retirement system; superannuation, the Age Pension and other savings, including home equity.

However, as evident from a recent survey, Australia’s retirees do not feel fully supported by the Australia’s retirement funding system.

The three pillars of retirement funding have not, to date, adequately supported all Australians for several reasons:

• Australians are living longer, a fact that’s often communicated with rhetoric around this being an economic burden or threat
• Australia’s retirement system was not designed to support retirees for 20-30 years of life beyond work
• Superannuation came in too late for most baby boomers; accordingly, the median account is $200,000 at retirement (less for women), which provides income for around 10-15 years
• The Age Pension is inadequate as a sole source of retirement funding
• Home equity, the largest pool of savings for most retirees, has not been appropriately and effectively made available to improve retirement funding.

Household Capital’s CEO Dr Josh Funder commented, “By helping retirees to better access and responsibly use home equity for retirement funding, several important areas of social and economic policy can be addressed.”

“Retirees are a large group with significant inaccessible wealth in home equity and major unmet needs in consumption for wellbeing.”

“By unlocking home equity to improve retirement funding, we can enhance both the quality of life in retirement and economic activity.”

Household Capital has made several recommendations to the Retirement Income Review, including:

• The government’s ‘downsizer measure’ permits the concessional treatment of $300,000/$600,000 (single/couple) from the proceeds of downsizing. Older Australians should be incentivised to use their home equity to improve their retirement funding by having this measure applied to all forms of equity release. This improved policy would support ageing and help the economy with no additional tax expenditure.
• Australian retirees feel abandoned by the banks and need access to capital and income throughout the course of their retirement. Home equity can provide both capital and income, and help retirees mitigate longevity and contingency risks.
• There should be a requirement for all superannuation funds to offer a comprehensive retirement income package to members. This would offer appropriate products to ensure retirees have adequate retirement funding and should include access to home equity retirement funding. This should be a legislated minimum service provision for all super funds.
• Reverse mortgage brokers are exempt from a best interest test and prohibition of commission based sales. Mortgage brokers selling reverse mortgages should not be exempt from tougher regulations that apply in respect of financial advice.
  “The broad policy and legislative framework for responsible access to home equity is in place, is comprehensive and sound,” said Dr Funder.

“There are no major barriers to the transformation of home equity to play a foundation role in funding retirement.”

“Australians know that the family home provides retirement lifestyle, wellbeing, housing and funding. The federal government must support the retirement funding sector to deliver better outcomes in retirement.”

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Josh Funder

Household Capital, an independent, specialist retirement funding provider has welcomed the federal government’s review of the rate it charges for the reverse mortgages in its Pension Loan Scheme (PLS), its expanded home equity funding program.

Dr Joshua Funder, Chief Executive at Household Capital, says the review is an endorsement by the government of the importance of home equity as part of the third pillar of retirement funding, even while the big banks have stepped away.  “Australians know that the family home provides retirement lifestyle, wellbeing housing and funding.  The federal government must support the retirement funding sector to deliver better outcomes in retirement,” said Dr Funder.

Government review of its PLS interest rate is urgently needed

“Australians deserve efficient, affordable access to their home equity to fund their retirement. For many retirees, the PLS is a start, albeit with limited flexibility. We welcome the Treasurer’s willingness to examine the current rate of 5.25% p.a and move towards a lower rate such as that offered by private sector providers such as Household Capital’s own rate of 5.15%. It’s a pleasing response to the advocacy of National Seniors.

“We call on the Government to support retirees with this review by passing on improved home equity interest rates, as a lower rate of compound interest can have a significant impact in preserving more home equity throughout the term of their loan” said Dr Funder.

Household Capital’s innovative approach to wholesale funding means it can offer a rate significantly lower than its competitors. With the PLS under review, Household Capital’s rate remains the lowest on the market at 5.15% p.a after passing on the RBA’s October rate cut in full.

Government must do more to protect seniors

Although a reduction in the interest rate payable on the PLS may benefit retirees, Dr Funder cautioned that applicants do not receive the full protection of ASIC responsible lending:

“While PLS customers receive a Centrelink government loan, they are currently exempt from responsible lending criteria set out by ASIC. Additionally, as ASIC noted in its 2018 review of reverse mortgages, all PLS customers should be thoroughly vetted for potential elder abuse. We hope the Treasurer will take this into consideration in the review,” said Dr Funder.

 Retirees deserve innovative retirement funding solutions

Household Capital provides Australian homeowners with such much needed, flexible access to capital. This may include being used for income, improved housing or family expenses, contingency funding for unexpected expenses or funding the transition to aged care.

“Improved retirement income is crucial, but it’s not the only funding that retirees need for 20 years or more of retirement. Nor does it cover all retirees’ capital needs, which is where private providers come in. Household Capital provides Australian homeowners flexible access to retirement funding in income and capital; this may include a regular income stream, improved housing, contingency funding for unexpected expenses or funding the transition to aged care.”

Retirees are doing it tough – and banks have stepped away

Dr Funder says that many retirees are still paying off a mortgage at higher rates than new loan  applicants.

“The banks are not looking after their retiree customers by failing to pass on rate cuts to existing loans. it means loyal retirees still paying off their forward mortgage don’t get the low rates that are offered by banks to bring new customers in the door.

“Home equity can be used by retirees to refinance their mortgage and free up retirement funding. Because there are consumer protection laws governing reverse mortgages, there is no risk of default or having the bank take the family home,” he explained.

“We provide retirees with personalised service, flexibility and choice to cover the fact that there is no ‘average retiree’. Like the Centrelink PLS, Household Capital wants to meet the retirement funding needs of senior Australians,” concluded Dr Funder.

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