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Heartland Finance is now part of a digital specialist bank, after joining the former Challenger Bank business.
Reverse mortgage lender Heartland Finance is now operating under a new name, after joining Heartland Bank in Australia.
Earlier this year, New Zealand-based lender Heartland Bank became the first NZ bank to acquire an Australian authorised deposit-taking institution, when it completed its acquisition of Challenger Bank.
On 1 May, it rebranded Challenger to Heartland Bank (Australia).
It has now brought its Australian reverse mortgage lending business, Heartland Finance, under the brand, too.
As such, Heartland Bank is now responsible for around 42 per cent of the reverse mortgage market in the country.
The move forms part of Heartland Group’s plans to make Heartland Bank (Australia) the only Australian specialist bank provider of reverse mortgages and livestock finance (available through StockCo, part of Heartland Bank).
It comes amid a period of transformation for the Australian arm of Heartland Group Holdings Limited, which welcomed Michelle Winzer – the former CEO of RACQ Bank – as its new CEO in July, alongside Vaughan Dixon, the new chief technology & operations (CTO), and Medina Cicak, its newly appointed chief commercial officer (CCO).
Cicak said: “We are excited to deliver the Heartland Bank brand to our reverse mortgage customers.
“The simplified and modern new brand elements are visually appealing and provide simple navigation across our customer-facing platforms.
“The rebrand supports Heartland Bank’s strategy to provide finance solutions that meet the unique needs of older Australians.”
Speaking to The Adviser, she said Heartland Bank was eager to continue to connect with brokers, stating: “Having been in my new role for almost a month, I now have a clear vision of Heartland Bank’s strategy and the crucial role our broker relationships play. I’m excited to meet our broker partners and explore how we can work together to offer homeowners the financial support they need, all while keeping their beloved family homes.”
She added that the new Heartland Bank website offers brokers a range of information and tools to support their clients and how to submit and track online applications through the newly branded Heartland Bank broker portal.
Reverse mortgage business grew 20% in FY24
The Australian reverse mortgage business has been growing recently, with Heartland Group’s financial results for the year ending 30 June 2024 revealing a 19.7 per cent rise in reverse mortgage receivables in the financial year 2024, growing $298.3 million to $1.81 billion.
While the bank believes Australian interest rate and cost-of-living pressures will likely remain until the second half of FY25, it flagged that its Australian reverse mortgage credit quality was strong, with a weighted average LVR of 23.5 per cent and only 0.6 per cent of loans had a loan-to-value ratio (LVR) over 50 per cent.
However, there are signs customers are continuing to borrow conservatively. The average loan term at repayment is now six years and the average initial reverse mortgage loan amount is $142,000. While the amount borrowed increased from $127,000 in the prior financial year, Heartland said that customers continue to borrow only what they need and are typically turning to reverse mortgages to access equity in order to upgrade their home, consolidate debt, and supplement their income.
Other purposes include upgrading a car, taking a holiday, and paying medical costs.
The CCO said: “Our customer data confirms that many customers are using their Reverse Mortgage to make the most of a lifestyle that is free from financial stress, while remaining in the community and place they call home for as long as they choose.”
[Related: Reverse mortgages surge creates broker opportunities: Heartland]
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