Heartland Group’s Australian reverse mortgage book grew strongly in the December half, as an ageing population turned increasingly to equity release to top up retirement incomes.  This growth needs to be seen in context. Heartland claims a 41 per cent share of the Australian reverse mortgage market with a portfolio balance of just A$1.7 billion. Still, the book grew 20 per cent during the half and income was up 13 per cent. Not many bankers can point to growth numbers like that at the moment. Heartland released its half-year financial report yesterday, saying: “Demand continues to increase for reverse mortgages on both sides of the Tasman, driven by continued cost of living pressures and a growing proportion of people aged 65 and over in both populations.” It said it expects growth rates to remain high as older Australians seek to remain in their homes as they age. Heartland’s New Zealand reverse mortgage receivables of NZ$972.5 million were up 18.7 per cent over the half. Heartland said it has room to grow the local reverse mortgage book. The aggregate senior limits of its two reverse mortgage securitisation warehouses were expanded by A$200 million during the half. Market share in Australia has increased from 36 per cent in September 2022.  The average Australian reverse mortgage loan size is $190,849, at an average loan-to-valuation ratio of 11.9 per cent at origination. The average age of borrowers is 77. Because no interest payments are made during the life of the loan, with interest capitalised and repaid with the principal when the property is sold, the average LVR of the book is 22.9 per cent. Heartland also provided an update on its acquisition of Challenger Bank from Challenger Ltd, which has become something of a saga. The sale to Heartland was announced in October 2022, with Challenger saying it expected to complete the sale by the end of June 2023. Heartland said yesterday that regulatory approvals are “in the final stages” and it expects to have the deal completed in the second half of the year.  It will report costs of $3.5 million related to the sale this financial year, “reflecting underlying NPAT of Challenger Bank.” It said it was happy with the inflow of deposits into Challenger Bank and that funding from Australian retail bank deposits would lower Heartland Australia’s cost of funds. It envisages Challenger as a specialist bank, offering reverse mortgages and livestock finance initially, with plans to expand into motor and asset finance.