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Public Trust returns to lending market

The Public Trust has started dealing with mortgage brokers again and is now targeting “middle New Zealand, the typical Ma and Pa” borrowers.

Wednesday, April 6th 2011, 6:53AM

by Jenny Ruth

It entered into an alliance with the Allied Kiwi mortgage broker network in October and that is progressing well, says Simon Dixie, general manager of operations.

 

"I have to say we're very pleased. We're getting some very good referrals from Allied and Allied's seeing the benefit from the wider opportunities we can offer," Dixie says.

The Public Trust's decision to start dealing with mortgage brokers is somewhat of a departure for the government-owned trustee company.

"We've never strongly promoted our services as a separate mortgage entity. It's always been in association with our range of business."

The Public Trust has previously been involved in commercial lending but a strategic review in early 2007 led to a decision to refocus on leveraging off its core trustee and will writing services into providing ancillary services such as mortgages and conveyancing, Dixie says.

"The GFC (global financial crisis) just reinforced, from a risk perspective, that was the right thing for the Public Trust to do," he says.

Commercial lending peaked at about 27% of the Public Trust's mortgage portfolio in September 2008 but has since declined by 35%. The organisation is running down its commercial portfolio by attrition rather than actively trying to get its customers to refinance elsewhere.

"It's not about sending people a letter and saying take your business elsewhere." Instead, the Public Trust is waiting until existing facilities expire and then working with customers to ensure a smooth transition, Dixie says.
The Public Trust is now targeting "middle New Zealand, the typical Ma and Pa." While it doesn't see professional property investors as part of its market, it doesn't completely rule out financing residential investment as part of providing a wider range of services, he says.

"Our territory is high quality. We price below our competitors and that reflects the fact we want high quality. Our specialty is we have a unique offering by being able to combine a range of trustee services with a very low-cost mortgage."

Public Trust's floating mortgage rate is currently 5.60%, one of the lowest in the market and equal to that of Westpac and just above BNZ's Total Money rate of 5.59% but below Kiwibank's floating rate of 5.65% and ANZ National Bank's 5.74% rate and ASB Bank's 5.75%.

The Public Trust's annual reports show its mortgage book has fallen from $317.1 million at June 30, 2008 to $215.7 million at December 31, 2010. Individual and collective allowances for bad loans fell to $10.7 million for the latest six months compared to $17.8 million in the previous first half. Dixie says impairment charges are expected to continue declining.

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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 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 - - - -
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 2.93 3.07 3.24
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 3.35 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 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 1 September 2020 5:00am

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