HOUSEHOLD Capital has completed a $300 million financing package from Citi and IFM Investors, allowing for major new investment into retirement housing.
The securitisation debt facility will enable Household Capital to provide retired Australian homeowners with long-term funding for retirement needs.
This segment of the market reportedly has more than $1 trillion in home equity currently available.
“We originate responsible, long term, low risk Australian residential mortgages, enabling retirees to access some of the equity in their home to achieve a more secure and dignified retirement, recognising the family home can be both the best place to live and a way to fund retirement,” said Joshua Funder, CEO of Household Capital.
Through working with Citi and IFM Investors, Household Capital plans to make home equity more efficient and more readily available and dependable for retired Australians, through low interest rates.
“The wealth of baby boomers is mostly tied up in their home. Australian seniors need ubiquitous, responsible, long-term, and efficient access to home equity,” said Nick Sherry, chair at Household Capital.
The facility will also refinance Household Capital’s legacy funding arrangements, while also providing the group with a more effective long-term funding solution to enable further business growth.
“We believe that our investment will help generate risk adjusted returns for our investors, while delivering a social dividend for retired Australians. By working with Household Capital, we are able to directly support the quality and availability of retirement housing and funding,” said Hiran Wanigasekera, executive director of debt investments at IFM Investors.
According to Funder, Household capital is currently looking to respond to the federal government’s Retirement Income Covenant and Retirement Income Review, which emphasised the crucial role that home equity has in addressing the financial needs of retired Australians.
“For most people retiring today who haven’t really enjoyed the full benefits of superannuation over their working lives, their home represents a considerable part of their net wealth,” said Deborah Ralston, co-author of the Retirement Income Review and chair of Household Capital’s advisory board.
Last year, the Retirement Income Review led to calls for baby boomers to access house equity as most retiring today do not have enough superannuation to support more than 25 years of retirement, with Household capital joining this chorus.
“The baby boomers coming through to retirement want to know that they can have a good quality retirement and feel confident and happy that they can use their resources well, including home equity.”