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Mortgages

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Another non-bank lender arrives

New Zealand’s fledgling non-bank home lending sector has gained another new entrant which styles itself New Zealand Mortgage Funds.

Wednesday, May 29th 2002, 10:17PM

by Jenny Ruth

Founded by former mortgage broker Sean Davis, who placed his first mortgage with ANZ Bank in 1995, the company started up in February but only began actually financing mortgages from the beginning of May using Australia-based wholesaler Interstar.

There are no hard and fast figures, but the best guestimate is that non-bank lenders in New Zealand currently account for less than 5% of the mortgage market. That compares with about 15%, or perhaps a little more, in Australia. In the US, by contrast, non-bank lenders, including the famous Fannie Mae, are mainstream.

Rotorua-based Davis says he started out as an insurance agent and his introduction to the mortgage broking business happened by accident. He could see the potential profitability, but didn’t get into specialising in the field until about four years ago.

After some time in the game, Davis started thinking his real skills were as "a technical person," possessing a good grasp of lenders’ guidelines and what it took to present them with the kind of deal they were prepared to finance. And he moved into training other brokers.

Currently he has a network of three other brokers operating under the “Complete Financial Services” banner in Rotorua, Taupo and Waihi. Another in Auckland is threatening to sign up for his services. Including these, he now has about 20 brokers signed up as clients of his new company.

Davis says his type of service may help further develop the potential of mortgage broking in New Zealand, which currently accounts for about 25% of home loans.

"Potentially, the broker market still hasn’t fully hit its straps yet," he says.

His view is that one key advantage the non-bank lending sector is offering personal service.

And a key selling point is that Davis views his customers as mortgage brokers, whether specialists or people acting in the more general financial advisory industry.

A problem he frequently ran into as a mortgage broker was that after he had introduced one of his clients to a bank, the bank would then try to take over the relationship. The bank would try to cross-sell other financial products to his clients, and even encourage them to find a reason to top up their mortgages, without giving Davis a look-in.

Davis says he won’t be dealing directly with brokers’ clients, unless that broker might have left the market, and promises to respect the broker-client relationship.

"I was a broker, so I feel I know what a broker wants," he says.

Interstar has been an "excellent" partner. "I can’t say enough about them." Davis says.

His major target is increasing the number of brokers he deals with and the major product he offers is a floating rate loan, which he sees as the area where non-bank lenders can be most competitive at the moment. Revolving credit, redraw facilities, construction loans and "no financials" for the self-employed are what he expects will be the staples of his business.

Key promises are acknowledgment of an application within two hours and at least conditional approval within four hours after that.

His major target is the refinancing market. While Reserve Bank figures show total mortgage lending is now approaching $70 billion, about $19 billion worth of existing mortgages are refinanced every year, Davis says. And that’s a bigger market than first-home buyers, he reckons.

His hope is that he will build a mortgage book worth at least $300 million within three years.

« Mortgage banks play possumMortgage debt rises in April »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.29 3.45 3.85
ANZ Special - 2.79 2.95 3.35
ASB Bank 4.45 3.35 3.19 3.85
ASB Bank Special - 2.85 2.69 3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 2.79 ▼2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.39 ▼3.29 ▼3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.80 2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 4.40 2.95 2.95 3.69
Kainga Ora 4.43 ▼3.29 ▼3.39 ▼3.85
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 2.65 2.79 3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - 2.99 3.05 3.69
The Co-operative Bank - Owner Occ 4.40 ▼2.79 ▼2.95 ▼3.39
The Co-operative Bank - Standard 4.40 ▼3.29 ▼3.45 ▼3.89
TSB Bank 5.34 3.59 ▼3.59 4.19
TSB Special 4.54 2.79 ▼2.79 3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.79 ▼2.69 ▼2.79
Median 4.55 3.32 3.39 3.69

Last updated: 28 May 2020 10:38am

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