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House prices added to Reserve Bank remit

Big news from Wellington this morning.

The Government has instructed the Reserve Bank to take house prices into account when setting monetary policy, marking a major shift in the central bank's role in the property market.

The central bank will now have to consider house price inflation as it weighs up interest rate cuts and hikes. [READ ON]

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Kiwibank profit growth slows but mortgage market share rises

The government-owned Kiwibank's profit growth slowed in the June quarter although its share of the mortgage market continued to grow strongly.

Thursday, September 6th 2007, 9:06AM

by Jenny Ruth

The bank's fourth quarter profit rose just 3% to $5.1 million, bringing its full-year result to $25.5 million, up 61.4% on the previous year.

"The mortgage market has been challenging in that quarter," says managing director Sam Knowles. "People have largely stopped doing things unless they have to do them as interest rate rises have started to come through."

Even so, the bank's mortgage book grew by $340 million to $3.48 billion in the three months, taking its market share to 2.5% from 2.33% three months earlier and from 2.07% in June 2006.

Knowles says continued investment, including the acquisition of nearly $700 million in AMP branded homeloans from HSBC from July 1, have also curbed profit growth. "We're building a platform. That has quite a cost." Under new accounting rules, those costs are being written off in the year in which they fall.

Kiwibank also owns 51% of New Zealand Home Loans but Knowles says its contribution to the current result wasn't large. While there were a few pilot loans written before Christmas, NZHL didn't fully switch to Kiwibank funded loans (previously, Sovereign provided the funding) until February and March, he says.

Knowles says Kiwibank is likely to "have a really good look" at dealing with mortgage brokers generally in about a year.

The bank is already dealing with brokers with the AMP branded loans and is also participating in the www.fundit.co.nz mortgage auction site.

"We certainly see mortgage broking as the marginal business in mortgage lending. It's what you do when you've run out of all your other strategies," Knowles says.

"It's generally lower margin and lower value loans because the duration of the loans is lower."

The big challenge for mortgage brokers "is to be able to prove that the value of the loans they're originating is as high or higher than the loans the bank is originating. Brokers tend to focus more on volumes than on the value of loans, Knowles says.

« Three banks increase mortgage stakesCentral bank unlikely to raise rates this week »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 1.99 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.79 2.79 3.15
SBS Bank Special - 2.29 2.29 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 2.29 2.69 2.79
Median 4.54 2.79 2.99 2.96

Last updated: 15 February 2021 8:47am

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