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Sovereign takes more aggressive position

Sovereign’s decision to cut all its fixed rates by 15 basis points this week was a sign that it was taking a more competitive position in the market.

Friday, May 6th 2011, 7:02AM 2 Comments

Sovereign, which is essentially owned by ASB Bank, moves its rates at the same time and by the same amount as the bank. This week though it was only Sovereign which moved.

David Drillien says that Sovereign is taking a more competitive position in the market and this pricing change is one visible sign of that move.

The company's strategy is to use brokers to sell its home loans, but home loan sales are also used to sell life insurance.

Brokers who sold a certain amount of life insurance previously could offer home loan rates 15 basis points less than Sovereign's carded rate.

Drillien says the company is doing away with that position as most brokers qualified for the discounted rate, it was adding an extra layer of complexity to its offering, and it wasn't fair that the customers could potentially miss out on the better rate due to which broker they used.

Besides the rate cut Sovereign is loosening up its lending criteria and will be offering loans up to 95% of a property's valuation.

Drillien says there are some other initiatives being worked on with its home loan offering at the moment.

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Comments from our readers

On 10 May 2011 at 12:41 pm Darcy said:
This move, combined with Kiwibank moving into broker space (one baby step at a time), is a real threat to the main lenders now - will they begin to pay trail commission again? Is BNZ in danger of losing even more market share now that Kiwibank are using brokers?
On 11 May 2011 at 1:26 pm Simon said:
Darcy, Kiwibank charge the highest low equity premiums in the market. Any half intelligent broker knows this so unless the clients happen to have 20% saved they aren’t going to be recommending Kiwibank for a home loan anytime soon. Kiwibank are also charging their home loan customers fees to hold interest rates in advance of loan maturity (none of the other banks do this) so really their only value proposition is their New Zealand ownership. My experience with clients is that their number one priority is actually getting a good deal.

Kiwibank are now losing deals to other banks that they were automatically writing 2-3 years ago when the other lenders limited customers to 80% borrowing only. With ASB/Sovereign, Westpac and yes even our friends at BNZ lending back up to 95% the fact that clients can save thousands with these lenders will see Kiwibank continue to lose market share.

I think most brokers would back me when I say that it is BNZ that are the most aggressive on market share at present as they seem to be able to write deals that the other banks have no appetite for. I’d add that some of these deals that BNZ are writing they probably shouldn’t be!
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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.55 3.89
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.97 4.05 4.39
Kiwibank ▼5.15 4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 ▼4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 ▲3.55 3.89
Sovereign 5.30 3.89 4.05 4.39
Sovereign Special - 3.39 3.55 3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.19 4.35 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.39 3.55 3.89
Wairarapa Building Society ▼5.50 ▼3.95 ▼4.05 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.55 3.99
Median 5.34 3.97 4.05 4.39

Last updated: 21 January 2020 10:41am

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