ASB closed its HomePlus reverse equity product to new business from August 3. That leaves only Heartland, HSBC and SBS offering reverse mortgages to New Zealanders.
While new HomePlus applications will not be accepted any longer, existing HomePlus customers can still use the product.
An ASB spokeswoman said since its launch in 2010, ASB HomePlus had been a satisfactory product for the many customers who used it to borrow against part of the equity in their homes. “However, ASB has decided not to continue this niche product at this time.”
Massey University banking expert Claire Matthews said it was a very niche product. “There is a place for it in the market but it is not widespread. There is a lot of misinformation around the product and there are concerns about how it’s used. It’s not suitable for everyone but it is suitable for a small group of people. It is a way of accessible the equity you have got in your home without having to sell it and move. There are limits - you can't access the whole amount of equity... and there is a slightly higher interest cost associated with it.”
Reverse equity products have been suggested as part of the decumulation solution for retiring New Zealanders, especially in areas where house prices are rising strongly.
But Matthews said ASB’s decision likely reflected that the bank had not been able to generate enough demand.
Claire Dale, of the Auckland University retirement policy and research centre, said the expensive set-up costs associated with the loans and the higher interest rate combined to reduce appetite for the product. "With ASB dropping their HomePlus product, there is very little competition in the field, which does not work to the advantage of potential consumers."
