Household Capital secures $300m investment

Household Capital has confirmed the completion of a securitisation debt facility with Citigroup Inc (Citi) and IFM Investors, with the global bank and the global fund manager collectively supplying the reverse mortgage provider with $300 million. 

As per Household Capital, this injection of funds will assist in meeting “the increasing demand from retired Australian homeowners who are seeking responsible, long-term funding for their retirement needs”.

Household Capital chief executive Dr Joshua Funder said that, by partnering with Citi and IFM Investors, the reverse mortgage provider is “making access to home equity more efficient, more available and more reliable for retirees”. 

“This funding facility delivers Australian retirees low interest rates, which mean more access to their home equity retirement funding,” he said.

Dr Funder later added that Household Capital was focused on responding to the federal government’s recent reports regarding retirement income, stating that this funding package is an “endorsement of our approach” and that it will continue to help “retired Australians live well at home”. 

Published in July 2020, Treasury’s Retirement Income Review noted that “relatively small portions of home equity through the Pension Loans Scheme” could be one method to boost retirement incomes, and that the existence of asset rich, income poor retirees with an age pension suggests that “home equity release has significant potential to help support retirement incomes”.

Co-author of the Retirement Income Review and chair of Household Capital’s advisory board Professor Deborah Ralston said that, for most people retiring today who haven't enjoyed the “full benefits of superannuation over their working lives”, their home represents a “considerable part of their net wealth”. 

“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,” Professor Ralston added.

Representatives from both Citi and IFM Investors both expressed positive affirmations to the deal, noting that this investment will assist the reverse mortgage provider as well as retired Australians. 

Citi managing director, head of financing and securitisation Australia & New Zealand, Will Mortimer, said: “We were delighted to work with Household Capital and IFM to develop an innovative securitisation structure that balanced the needs of Household Capital, Citi and IFM’s investment requirements.

“The facility will refinance Household Capital’s legacy funding arrangements and ultimately deliver a more cost effective, long-term and scalable funding solution to Household Capital to help grow their business.”

IFM Investors executive director, debt investments Hiran Wanigasekera added: “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.” 

[Related: Super for housing would escalate property prices: Report]