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Sovereign axes lo-doc lending

Sovereign Home Loans, one of the most popular non-bank lenders in New Zealand, has announced further tightening in its lending criteria.

Friday, October 3rd 2008, 9:22AM

by Maria Scott

The bank, part of the ASB banking group, is no longer lending on a low-documentation basis. Existing low-doc customers seeking top-up loans will be required to provide full and complete evidence of their incomes. In addition, the maximum loan-to-value ratio on all other products will be 80%.

Sovereign says that it will process loans that have already been fully or conditionally approved under its old criteria but approvals given in principle will be processed under the new rules.

This is the second time in little more than a month that the lender has tightened its criteria. At the beginning of September it increased prices on a range of products and stopped lending on certain types of properties, including high density apartments and leasehold properties.

Mortgage brokers said at the time that they did not think the changes would dent Sovereign’s popularity with brokers.

However the latest decision to axe low-doc lending may come as a blow as it will further restrict choice for brokers and clients in a part of the market where few lenders are still active.

Sovereign has been promoting sales of insurance through brokers and says that it is planning further changes to promote and encourage risk insurance cross-selling. It will be holding a series of meetings over the next few weeks with advisers and heads of broker groups to discuss these plans. This process will include asking home loan advisers for information about their cross-selling activity.

“The relationship between risk insurance and lending remains fundamental to Sovereign’s business model and is especially important in the current environment,” the company says.

« Bollard likely to slash rates later this monthOCR cut to 7.5% »

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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 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
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 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac ▼3.39 3.45 ▼2.99 ▼3.35
SBS Bank 4.54 ▼3.05 3.19 ▼3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - ▼2.55 2.69 ▼2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 ▼2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 ▼3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.10 3.19 3.12

Last updated: 7 August 2020 5:51pm

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