tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, July 23rd, 7:18PM

Mortgages

Mortgage Rates Daily Commentary
Friday 23 July 2021  Add your comment
Valuation profession adapts

Amid unprecedented challenges, the valuation industry has been forced to adapt its traditional operating model and take on some new ideas: [READ ON]

rss
Latest Headlines

NZF moves from LMI to LEM

NZF has switched from charging borrowers with low equity an upfront lenders mortgage insurance (LMI) premium to adding a low equity margin (LEM) to such borrowers' loans.

Tuesday, August 11th 2009, 10:00PM 1 Comment

If there were no difference in cost to the borrower, this looks like a "six of one, half a dozen of the other" proposition which would make little practical difference.

NZF chief operating officer Adrienne Smith says comparing costs of the new LEM system, under which all borrowers pay the same, with the LMI premiums formerly charged is far from simple.

"LMI premiums vary widely, depending on the borrower's circumstances, and can range from 0.5% right up to nearly 4%," Smith says. In some cases the new LEM system will cost more than paying an LMI premium and in other cases less.

Using LEM, all NZF's borrowers with loan-to-value ratios (LVRs) over 80% and up to 85% pay an 0.5% margin over the carded interest rate, those with LVRs between 85% and 90% pay a 1% margin and those over 90% up to 95% pay a 1.5% margin.

After two years, all LEM loans would be reviewed and the premium adjusted appropriately.

"We do believe this is more simple to explain," Smith says. "Some clients still get it into their head that LMI offers them some sort of protection."

The built in review after two years does encourage borrowers to increase their equity to reduce or eliminate their LEM premium, she says. If a property's value has increased over the two years, the borrower can get a new valuation to reduce or eliminate the LEM premium.

"This is the best time to consider this new structure," Smith says. "Interest rates are still very low and, even including the maximum LEM margin, our clients can secure a 95% home loan for one year at 7.55%. A year ago, this would have been considered a very sharp rate indeed."

 

Tags: Mortgage Rates

« More signs banks easing lending rulesKiwibank laying down the gauntlet »

Special Offers

Comments from our readers

On 12 August 2009 at 3:30 pm Alistair Lumb said:
And if the value of the property decreases ???
Commenting is closed

 

print

Printable version  

print

Email to a friend
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.95 3.29
ANZ 4.44 3.10 3.50 3.84
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.50 2.90 3.24
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
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 Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 2.15 2.35 2.75
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.69 2.99 3.29
SBS Bank Special - 2.19 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▲2.29 - -
The Co-operative Bank - Owner Occ 4.40 ▲2.49 ▲2.89 ▲3.19
The Co-operative Bank - Standard 4.40 ▲2.99 ▲3.39 ▲3.69
TSB Bank 5.34 ▲3.30 ▲3.69 ▲4.04
TSB Special 4.54 ▲2.50 ▲2.89 ▲3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.68 2.99 3.29

Last updated: 19 July 2021 9:09am

Previous News

MORE NEWS»

News Bites
Compare Mortgage Rates
Compare
From
To
For

To graph multiple lenders, hold down Ctrl key while clicking in list box

Also compare rates to OCR
Find a Mortgage Broker

Add your company

Use map
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com