Without doing the maths, the gist of your proposal is that earnings from reverse mortgages in the future should be discounted back to the present day because cash back in the future is worth less than cash today. I agree with that in principle, but the mechanics of 'coming up with a number' seems more difficult. Let me outline what I do know as a starting point.
1/ Reverse Mortgages are lumped in with the 'Households' financial receivables. Those total $1,717.407m at balance date, of which $516m + $405m = $921m (just over half) are Reverse Mortgages.
2/ Reverse mortgages income is 'booked' year to year but not collected until the homeowner moves out. This means a reverse mortgage payment is always 'on time' and any non payment trouble will only be booked when the homeowner moves out at the end of the contract.
3/ For assessment of credit worthiness, Reverse Mortgages are part of the 'behavioural portfolio' of loans. Because of the way these loans are structured, I imagine they are always classed as 'Not in Arrears'.
I imagine the Reverse Equity 'income' must be accumulating as an asset on the Heartland balance sheet. Is it under 'Capitalised Net Interest Income' (not separately listed as a balance sheet item, but mentioned in the 'Reconciliation of Profit after tax to net cash flows from Operating Activities')? That was $32.221m over FY2017 (AR2017 p16).
The average Australian reverse mortgage balance over the year was:
($516m + $434m)/2 = $475m
The average New Zealand reverse mortgage balance over the year was:
($405m + $362m)/2 = $384m
So the average interest rate charged over all these reverse mortgages was:
$32.221m / ($475m + $384m) = 3.75% !??!??!!!!!
That can't be right!
SNOOPY