Joshua Funder

Household Capital, a leading Australian provider of home equity retirement funding, today announced the completion of HHC 2025-1 RMBS Trust, a $270m mortgage securitisation dual-rated by Moody’s and S&P. Citigroup Global Markets Australia (“Citi”) acted as Arranger and Citi and Macquarie Debt Markets team (“Macquarie”) were Joint Lead Managers on the transaction.

The innovative mortgage securitisation allows Household Capital to continue to meet the increasing demand from retired Australian homeowners seeking responsible, long-term funding for their retirement needs – a sector based on more than $1.3 trillion in retiree home equity available today.

The Household Capital portfolio attracted investment from global insurance, superannuation, banking and institutional credit fund investors from Australia, US, UK, EU and Hong Kong. The final transaction had strong investor demand and was more than 4x covered.  The senior A Note was rated AAA by S&P and Aa2 by Moody’s with an average weighted life of 3.4years based on an underlying portfolio loan-to-value ratio of less than 25%. An innovative subordinate X Note with an average weighted life of 1.8years was introduced in the securitisation to provide sustainable originator funding of mortgages with lower cashflows.

The HHC 2025-1 transaction builds on the successful inaugural 2024-1 transaction to efficiently allow the trust to fund ongoing customer drawdowns on their home equity under their existing approved amounts as well as through potential future increases to their credit contracts – an important structural feature to ensure home equity is made available by the trust to fund the current and future needs of retirees.

The Household Capital mortgage securities were attractive to global investors based on meeting international risk retention standards.  Household Capital intends to list the notes on the ASX subsequent to the transaction.

Household Capital is a specialist 60+ lender, originating mortgages that don’t require the borrower to have an income or make regular repayments and provides a range of home wealth access options distributed direct to customers as well as via partners, advisers and brokers. The company began mortgage origination in 2019 and has built a contracted mortgage portfolio of over AUD$730m.

Household Capital CEO, Joshua Funder, said “Our latest innovative mortgage portfolio securitisation is a great outcome for Australian retirees and a big step forward in the evolution of the sector. We are delighted to work with Citi and Macquarie to deliver the high quality of our customers and the low-risk nature of our mortgages to local and global investors.   Our scalable securitisation program is essential to sustainably scale retirement housing and funding and help Australians meet the challenge of an aging population”.

“We were delighted to attract strong, global, diverse investor demand for our securitisation.  The way Australian retirees access the wealth in their homes using a Household Loan is different from similar approaches here and elsewhere. The rating on our portfolio reflects a series of key differentiators of Household Capital equity release mortgages: higher voluntary discharge, shorter duration, lower negative equity risk and higher cashflows. We have achieved a very strong dual rating and continued to innovate so these securities deliver for our customers, our investors and Household Capital” Funder said.

Nick Sherry, Household Capital Chair, said “Household Capital continues to lead the way in providing access to home wealth for older Australians. The securitisation of our mortgage portfolio is a major milestone in providing billions of dollars each year in additional funding for an ageing population.”

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Joshua Funder

Household Capital, a leading Australian provider of home equity retirement funding, today announced the completion of HHC 2024-1 RMBS Trust, a $263m mortgage securitisation rated by Moody’s. The Arranger and Sole Lead Manager on the transaction was Citigroup Global Markets Australia.

The innovative mortgage securitisation will allow Household Capital to continue to meet the increasing demand from retired Australian homeowners who are seeking responsible, long-term funding for their retirement needs – a segment of the market which has more than $1trillion in home equity available today.

Household Capital is a specialist 60+ lender, originating mortgages which don’t require the borrower to have an income or make regular repayments and provides a range of home wealth access options distributed direct to customer as well as via partners, advisers and brokers. The company began mortgage origination in 2019 and has built a mortgage portfolio of over $420m.
The Household Capital portfolio attracted widespread interest from insurance, superannuation, banking and institutional credit fund investors. The final transaction was 1.6 x covered and upsized.

Household Capital CEO, Joshua Funder, said “Our inaugural mortgage portfolio securitisation is a great outcome for Australian retirees and a big step forward in the evolution of Household Capital. The quality of our customers and the low risk nature of the mortgages we originate were critical in attracting local and global investors to sustainably scale retirement housing and funding and help Australians meet the challenge of an ageing population”.

The facility will refinance part of Household Capital’s existing mortgage portfolio and is based on a mortgage portfolio with an average loan-to-value ratio of less than 25%. “The way Australian retirees access the wealth in their homes using a Household Loan is different from similar approaches elsewhere.  The rating on our portfolio reflects a series of key differentiators of Australian equity release mortgages: higher voluntary discharge, shorter duration, lower negative equity risk and higher cashflows. We have achieved a strong Moody’s rating and innovated significantly to obtain a premium to par for the rated notes” Funder said.

Another innovative feature of the HHC 2024-1 RMBS Trust is that it will allow Household Capital customers to continue to draw on their home equity under their existing approved amounts as well as through potential future increases to their credit contracts.

Nick Sherry, Household Capital Chair, said “Household Capital has pioneered the delivery of home wealth to Australians. The securitisation of our mortgage portfolio is a milestone in the growth of our business.”

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Joshua Funder

Household Capital, a leading independent Australian retirement funding provider, is pleased to announce PEP will participate in a financing package to provide retirement funding and housing to Australian seniors.

PEP will invest in the mezzanine debt portion of the wholesale funding facility, joining existing mezzanine debt provider IFM Investors, the industry super-owned global fund manager, as well as senior financier Citi, one of the world’s biggest banks.

The funding provides Household Capital with access to over $600 million of wholesale funding to expand residential mortgage origination through 2023.

“Many Australians are being challenged by cost of living pressures and higher interest payments,” said Dr Joshua Funder, CEO of Household Capital.

“This funding will allow Household Capital to meet increasing demand from Australian homeowners to access the wealth in their homes and support adequate retirement funding, housing and care.”

Household Capital already counts UK-based Legal & General and Sydney-based Helia Group Ltd as strategic corporate equity investors and partners. “PEP brings deep experience in wholesale debt, structured finance and scaling business growth,” said Funder.

“We are delighted to secure PEP as a strategic partner and investor to help grow our business.”

Jake Haines, PEP Managing Director, said: “Household Capital has pioneered innovative, scalable debt funding to meet the retirement funding and housing needs of an ageing population.

“PEP identified Household Capital as a high-quality opportunity and is delighted to partner with a great company and to expand an important new category.”

Demographers indicate that more than five million Australian baby boomers face the prospect of inadequate superannuation balances thanks to increasing life expectancy.

The median household superannuation balance at retirement is under $200,000 because a low 3% compulsory contribution began halfway through the working lives of baby boomers.  At the same time, Australian retirees are the wealthiest in the world, with median home equity for retired homeowners over $800,000.

Nick Sherry, Household Capital Chairman and former Federal Minister for Superannuation and Assistant Treasurer, said the funding arrangement would allow Household Capital to deliver back to Australians their own wealth, stored in the value of their homes.

“The wealth of baby boomers is mostly tied up in their home, and our mission is to help Australians Live Well at Home,” said Sherry.

“Working together, we can help deliver widespread access to some of the $1 trillion in home equity wealth already saved by Australian retirees, providing certain, lifelong retirement funding at home. The family home has always been a missing link in the nation’s retirement funding system.”

Dr Funder said that Household Capital remained focused on responding to the Australian Government’s Retirement Income Review and Retirement Income Covenant, both of which highlighted the important role home equity can play in meeting people’s financial needs in retirement.

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Joshua Funder

Household Capital has announced its acquisition of an innovative home equity access start-up, Pension Boost.

Pension Boost takes the hassle out of the process of accessing the HEAS with Centrelink for its retiree customers. It has created a straight-forward proposition – it educates consumers on the HEAS, simplifies the application process, and undertakes all follow-up with the relevant government agencies. Since launch in 2019, Pension Boost has originated around 30 percent of HEAS applicants.

Household Capital CEO, Dr Joshua Funder, says the acquisition will enable Household Capital to provide a trusted ‘one-stop-shop’ service for Australian retirees to access their home equity to meet their retirement funding needs.

“The acquisition expands Household Capital’s proposition, widens its market reach and is consistent with our strategy to be the most trusted provider in the Australian home equity release market,” said Dr Funder.

“The combined business will position us to be the leading provider of home equity retirement funding.  Together we play a critical role in meeting the needs of an ageing population, particularly as many Australian retirees have inadequate super saved to meet their needs.”

The government’s Home Equity Access Scheme is exhibiting similar growth rates to Australia’s home equity access market, currently circa 40 percent per annum, and is expected to become a more material component of the home equity market over time.

“2023 will be the biggest ever year in Australian home equity retirement funding, forecast at over $750 million – this is an inflection point in home equity as the third pillar of retirement housing and funding,” said Dr Funder.

Pension Boost was started by Paul Rogan, a renowned innovator having co-founded Retirement Essentials after a long career at Challenger. Paul will join Household Capital’s Advisory Board, to share his expertise and experience with Household Capital’s team.

Commenting on the transaction, Paul Rogan said, “It’s clear we both share the same ambition to cement home equity access as the third pillar of retirement funding.”

“Bringing the two businesses together establishes the leading platform for retirees looking to improve their retirement funding.”

“The combined platform also enables superfunds and financial advisers to support their retiree members or clients”.

Nick Sherry, Chair of Household Capital said, “The Pension Boost platform, Paul, and the team, extends our capability and will complement our mission to deliver scaled access to home equity.”

“We believe our proposition, together with superannuation and the Age Pension, provides the full package for retirees.”

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

The acquisition of Pension Boost will enable Household Capital to help retirees, as well as retirement providers such as super funds, choose the best solution for them now and in the future as their needs change.

Household Capital Advisory Board Chair, Deborah Ralston, said “Home equity is a large part of a retiree’s overall savings; the integrated platform that Josh, Paul and the team have created is an innovative way to access the third pillar of retirement funding.”

The acquisition will position Household Capital as the leading provider of home equity access in 2023.

“We are excited to bring the two businesses together to explore ways to help Australia’s retirees improve their retirement funding options with the best mix of products, interest rates and service,” said Dr Funder.

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Josh Funder

Household Capital has announced the completion of a Series B financing, with UK global asset manager and financial services provider Legal & General acquiring a 20 percent stake in the Australian company. Existing and new investors joined Legal & General in the Series B financing, which takes the total amount of equity capital raised by Household Capital to $25 million since launching in 2017.

Legal & General’s strategic investment, Household Capital’s first non-domestic, multinational investor, will be used to underpin the Australian home equity retirement funding provider’s corporate growth, and build on its early success.

Legal & General – a leading provider of insurance, annuities and lifetime mortgages in the UK and a global asset manager with close to £1.2 trillion in assets under management – is dedicated to helping institutions and individuals in all phases of pension and retirement planning. Household Capital will benefit from this deep understanding of retirement markets, asset management and market leading experience of equity release and product innovation.

Joshua Funder, Chief Executive Officer of Household Capital, said, “Legal & General’s strategic investment shows when it comes to tackling the challenge of our burgeoning retirement-age population, global investors see Australia as a significant market opportunity.”

“We’re excited to have an investor on board with experience in this market segment and who recognises that Household Capital is an innovator in home equity retirement funding with a clear values-based focus on customer outcomes.”

Chris Knight, Chief Executive Officer of Legal & General Retail Retirement said, ‘‘This is a great opportunity to invest in a dynamic business, in a market with lots of potential. It reflects our commitment to improving the opportunities available to everyone at retirement, regardless of where they may be, so that they can live longer, healthier and happier lives.”

“The Australian equity release market is extremely promising, with Household Capital at the forefront of developing innovative funding options for retirees. We’re looking forward to working together to help grow the scale of the business so that consumers have better options at this critical life stage.’’

Series B fundraising

The Series B fundraising will enable Household Capital to continue to meet its growth objective; to provide retired Australian homeowners with solutions to their increasingly complex retirement funding needs.

The funds raised will be used to grow Household Capital’s team, to enable the business to continue to provide the high quality personalised service for which it’s become known. It also plans to expand its offering of innovative home equity retirement funding solutions, increase its marketing footprint and continue to invest in technology.

Legal & General and incoming Series B investors join the company’s initial investors, including ME Bank, which holds both an equity stake and has provided Household Capital’s initial debt facility.

Combined with its strong digital offering, local market expertise and innovative wholesale debt structure, Household Capital will continue to meet its growth objectives, providing retired Australian homeowners with solutions to their increasingly complex retirement funding needs.

Nick Sherry, Chair, Household Capital and former Federal Minister for Superannuation and Corporate Law said, “It is a myth that Australians downsize. They want to continue to live in their homes and in their community.”

“Drawing down part off the capital in their home can help many retirees achieve their objectives and maintain a good lifestyle.”

“Our investors know that growth in home equity retirement funding is not only necessary – it’s inevitable.”

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Josh Funder

Household Capital, an independent, specialist retirement funding provider, and ME Bank, an industry super fund-owned Australian bank, have announced a partnership establishing a $100 million wholesale debt facility.

The terms of the facility are innovative and designed to meet the major unmet financial needs of Australian retirees who plan to continue living at home.

ME Bank holds a minority equity stake in Household Capital.

Needs-based finance innovation

Australians are living longer but many do not have enough super savings to provide sufficient income throughout retirement.

“Retirees want to stay at home, but many are struggling to make ends meet as they age,” said Josh Funder, Managing Director of Household Capital. “Our goal is to deliver a values-based service to help Australian retirees Live Well At Home.

“We fill the gap left by the banks and offer flexible solutions for retirees to meet their retirement funding needs from a combination of superannuation, the savings in their home and their Age Pension.”

This Household Loan is designed to meet the needs of Australian retirees by allowing them to balance their savings, continue to grow their assets during retirement, and harvest a sustainable income from their investments.

Home equity supports a wide range of needs

Household Capital provides Australian home owners access to additional retirement funds by using a low interest rate loan to transfer a portion of the value of their homes into their superannuation fund or an investment account.

Home equity can also be used to fund in-home care and support the transition to aged care. This approach also enables the transfer of home equity between generations to fund first-home buyers’ deposits and educational expenses.

“Household Capital has expanded access to home equity, improved the customer experience and established new sources of finance,” said Jamie McPhee, Chief Executive Officer of ME Bank.

“We are pleased to work with such an innovative group to transform the lives of Australian retirees.”

Lowest available rate

Household Capital and ME Bank’s innovative approach to wholesale funding and building strategic partnerships means Household Capital can offer Australia’s lowest available rate to retirees needing to access their home equity.

“Our approach is more efficient and specific to the needs of retired Australians,” said Mr Funder.

“This enables Household Capital to mitigate risk when it’s occurred and offer retirees a significantly lower rate.

“Traditional bank reverse mortgages charged around 6.4%. Since the banks withdrew from providing access to home equity for Australian retirees, many remaining providers have increased their rates even higher.

“Working with ME Bank to deliver more efficient and responsible access to home equity, we are able to provide a rate of 5.9%.”

Withdrawal of the banks

Traditional bank reverse mortgages were not always aligned with the long-term housing and income needs of Australian retirees and did not provide genuine retirement funding adequacy and certainty.

Overall the reverse mortgage market in Australia remained static at around 35,000 outstanding loans and up to a $3.5 billion portfolio for the past decade before entering a decline associated with the withdrawal of bank providers. The end of 2018 saw the last of the bank reverse mortgage providers close their books, with both Commonwealth Bank and BankWest ceasing to write new business.

“The banks have pulled out, however nearly one trillion dollars of home equity savings owned by retirees remain potentially available, yet largely inaccessible, to support improved retirement incomes,” commented Nick Sherry, Chairman of Household Capital.

“We provide responsible and flexible access to lifetime savings, allowing retirees to make sound, longer-term economic and lifestyle choices.”

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Professor Deborah Ralston

Technological innovation is underpinning a revolution in how financial services are delivered in Australia, says Professor Deborah Ralston, Executive Director of the Australian Centre for Financial Studies (ACFS).

“Today this technology enables wealth managers to deliver financial advice to three million people annually, to oversee the administration of 20 million superannuation member accounts and to manage investments totalling $1.8 trillion on their behalf – and this revolution is still in its infancy,” she says.

“For example, how far away is the integration of advice and investment platforms, how will the regulators respond to this technological revolution, and will access to individual superannuation accounts in APRA-regulated funds lead to a decline in the growth of SMSFs?”

These are just some of several themes about the role of technology in financial services that will be teased out at morning briefing session being sponsored by ACFS and EY on 14 May in Sydney. It is titled “Riding the digital wave: are wealth platforms about to take off or wipe out?”

Speakers include former Labor Superannuation Minister Nick Sherry, EY Partner Jeroen Buwalda, ASIC Senior Executive Leader Ged Fitzpatrick, SuperIQ CEO Andrew Bloore and Colonial First State Executive General Manager, Linda Elkins.

Buwalda says wealth managers are facing unprecedented opportunities and challenges as a result of the increasing uptake and convergence of consumer technologies.

“In an environment where evolving technology makes it easier than ever to engage with customers, providers need to ensure they are making the best use of their platforms – whether collaborating with clients, advisers of platform partners in real time or managing regulatory compliance obligations more effectively,” he says.

Prof Ralston says every day we hear about new innovations in technology and how they are changing the way we live; smart phones, tablets and social media are already ensconced in our daily routines and wearable devices and 3D printing are almost upon us.

“These massive changes obviously beg the question about how wealth platforms are responding to technology innovation to better meet the needs of customers, trustees, administrators and asset managers.”

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The Self Managed Superannuation Funds Professionals Association (SPAA) has today warmly welcomed the appointment of Mr Bill Shorten MP to the position of Assistant Treasurer and Minister for Superannuation and Financial Services.

“We congratulate Mr Bill Shorten MP on his appointment as Minister for Superannuation and we look forward to working with him to advance the interests of the hundreds of thousands of Australians who choose to manage their own superannuation,” said Andrea Slattery, CEO of SPAA.

“The $390 billion self managed superannuation sector is now the largest sector in the $1.2 trillion superannuation industry by assets and number of funds, and represents the most engaged segment.”

“We note and support Minister Shorten’s comments that improvements to superannuation represent an opportunity to increase the quality of life of all Australians and deliver us a sustainable future. We are confident Mr Shorten’s background as trustee of two superannuation funds will stand him in good stead in his new role developing policies to benefit the broader retirement savings sector.”

“SPAA is keen to progress policies that raise standards of professional advice and help all Australians saving for retirement. We look forward to progressing the Future of Financial Advice Reforms and the implementation of the SPAA/Australian Artists Association guideline on investing in art through self managed super funds.”

“SPAA would like to work with the new government to find a workable solution to the excess superannuation contributions issue, where Australians legitimately trying to save for retirement, often by making catchup contributions later in life, are penalised with tax of up to 93% for making inadvertent errors.”

“SPAA is also keen to consult with the new government on the possibility of restoring the original superannuation contribution caps in full. The caps were halved in the 2009 Federal Budget against the backdrop of the GFC and have only been partially restored. SPAA believes the current caps, at $25,000 for those under 50 and $50,000 for those over 50 (the latter cap applying to those with less than $500,000 in superannuation), prevent large numbers of Australians from being able to save adequately for retirement.”

“SPAA would like to take the opportunity to thank the former Minister for Superannuation Chris Bowen for his very good work and to congratulate him on his new appointment as Minister for Immigration. We also look forward to working with Senator Nick Sherry in his new portfolio of Small Business,” Ms Slattery said.

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