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Mortgage Rates Daily Commentary
Thursday 28 March 2024  Add your comment
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BNZ's ads escape censure - just

The Bank of New Zealand has narrowly escaped censure over its “we’ve cut out brokers” advertising campaign.

Friday, December 3rd 2004, 2:55AM

A man in Christchurch, presumably a broker, called G Hill, complained to the Advertising Standards Complaints Board that the BNZ ad campaign was “miss-leading (sp) and dishonest”.

His argument was that BNZ withdrew from the broker market as it wasn’t doing very well there and that mortgages sourced through brokers are more cost-efficient than bank-originated home loans.

BNZ hit back at the allegations saying firstly that margins had been falling and broker commission costs had been rising.

“We felt we could offer our customers better interest rates by cutting out the middle man,” BNZ said in its submission.

It says cutting out the brokers meant a better deal for lenders. To prove its point the bank supplied some illustration of costs. The costs in the following table using “illustrative” margins and loan sizes have been used to prove its case.

Without paying brokers

Paying brokerage

Home Loan

$100,000

Home Loan

$100,000

Two year fixed rate

7.40%

Two year fixed rate

7.40%

Margin

0.60%

Margin

0.60%

Gross rev year 1

$600

Less brokerage

0.65%

Gross rev year 2

$600

Year 1 margin

-0.05%

Gross rev Yr 1

-$50

Year 2 margin

0.60%

Less trail com

0.25%

Margin less comm.

0.35%

Gross rev Yr 2

$350

Revenue Br 1 & 2

$1,200

Rev Yr 1 &2

$300

BNZ says it would make a loss on a two-year broker originated loan in the first year and overall for a two-year loan the revenue from a broker sourced loan was much lower than one through the bank.

It then argued that its rates when it was in the broker market were the same as the other major banks, but when it cut the ties with intermediaries its rates fell.

BNZ summed up its position thus: “Our overall view is that we have a cost advantage over our competitors who use brokers and we have been passing that cost advantage on to our customers.”

The ASC Board described the ad as “a positioning statement predicated on the advertiser’s status prior to, and post, its withdrawal from the broker market.”

A majority accepted BNZ’s arguments “that interest rates were lower due to the absence of the cost of brokers.”

However a minority said that bank’s interest rate argument “did not speak for itself.”

“The minority was not satisfied that the absence of a broker’s costs would reduce the overall costs to the bank as, in its view, other costs would be incurred…which are likely to exceed the so called ‘savings’ by not employing a broker.

However the bank won the argument on the majority view and the complaint was not upheld.

To compare rates go to the rates table at http://www.goodreturns.co.nz/section/200.html.

Rates can be sorted on a lowest to highest basis (and vice versa). Go there NOW

« Are two year rates a good deal?Reserve Bank expected to leave rates on hold »

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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 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
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 6.95 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: 28 March 2024 9:42am

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