Liberty combines home loans

Liberty Financial has combined all its home loan options into a single package under its new Star product.

Thursday, January 5th 2006, 12:14AM

Liberty distribution general manager John Mohnacheff says the Australian mortgage wholesaler wants to stay a step or two ahead of the banks with its Star product development, essentially aimed at every New Zealander that wants a home loan.

The omnibus home loan product has seven risk grades to take into account customer variables.

Liberty questioned the need for a proliferation of products when the consumer didn’t care.

“To the consumer it is a home loan, so it doesn’t matter where you fall in the credit spectrum – we do the entire lot now – one simple product catering to virtually every New Zealander.

“We brought that mass innovation to the market place, but having done that we found there were people still falling through the cracks for whatever reason,” he said.

“The space was originally (covered) as a non-conforming lender but we’re now migrating that into an area called specialty lending.”

Mohnacheff said every Star loan was now evaluated on a person’s unique merits and the resulting risk to Liberty.

“The gradients are in single digits so we start at 9% and finish at 12% over seven risk grades, so it’s very small variable.”

The product has three options - Nova, Jumbo and Interest-only. For a person that was self employed who didn’t want to disclose financials, Liberty would take them on their word but add 45 basis points of interest as the lo doc or Nova option.

If people wanted to pay interest-only that meant 25 basis points added to the loan rate.

The third, Jumbo, option was an added margin for those that wanted to loan a large amount, say between $750,000 and $1 million plus, given that banks were very reluctant to loan more than $750,000.

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