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Kiwibank's $100 m nest egg

Kiwibank has written more than $100 million in home loans so far.

Friday, September 13th 2002, 8:39PM

by Jenny Ruth

The government’s fledgling Kiwibank had a homeloan book of $43 million by the end of June, after 4 and a half months of operation, and has since built it to more than $100 million.

The speeding up of growth in the current quarter reflects the delays between approval and actually setting up a loan, says chief executive Sam Knowles.

Deposits reached $86.1 million by the end of June and have since risen to $160 million.

Kiwibank’s variable home loan rate has been consistently between 0.5 and one percentage point lower than the major banks, which means a saving of between $500 and $1,000 a year in interest costs on a $100,000 mortgage, Knowles says.

Kiwibank’s variable rate is currently 6.95% compared for 7.85% for four of the big five banks and 7.8% for National Bank.

The bank hasn’t been operating long enough to have any bad or doubtful debts, but Knowles says its credit criteria is consistent with the rest of the market and it ensures anything over 80% of valuation.

While it was receiving an exceptionally high number of home loan applications from people who don’t get anywhere near normal credit criteria, "we’ve probably got through that now." Some applicants had been "looking for something that banks would never provide."

He won’t reveal the bank’s current conversion rate between applications and actual home loans.

Kiwibank, which is planned to become profitable in its third year of operation, made a $10.2 maiden loss. Knowles says that’s about $1 million better than budget, largely because costs have been less than anticipated.

The bank currently has 260 branches, easily beating the next largest branch network, WestpacTrust with 201, and plans to have between 290 and 300 open by Christmas, Knowles says.

It continues to attract an "amazingly consistent" 500 customers a day on average, he says. "If anything, there’s a higher regard for us over time."

It has so far attracted slightly more than expected numbers of children and superannuitants and the amount on deposit per customer is about what was expected, but Knowles won’t disclose actual numbers.

Competitors have responded to Kiwibank’s initiatives, ANZ Bank the most noticably and "the others have tweaked their fees, but the actual value margin we’ve got hasn’t changed significantly."

Among other innovations, which include a guarantee that its home loans will be cheaper over the next six years than those offered by the five major banks, Kiwibank is offering "sweep" accounts. That means when a customer’s money on deposit in their current account exceeds a pre-set limit, the excess automatically transfers to a higher interest earning account. Kiwibank also takes into account a customer’s entire business with the bank before dishonouring a cheque, he says. It will be launching a credit care early next year.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 ▼6.79 ▼6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 ▼7.29 ▼7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 ▼7.39 ▼7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.30 7.89 7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.30 8.89 8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 ▼6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 7.15 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 14 March 2024 9:32am

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