Supplying readers with home loan news and mortgage rates is something that has become a core element of what Good Returns does.
Consequently we have been keeping a pretty close eye on what has been happening in the current round of mortgage rate wars.
BNZ's campaign to undercut everyone else has been fascinating to watch, as its margins on two year rates are so tiny they are almost invisible, plus its "Unbeatable" campaign has meant that the other banks can set the BNZ's rates.
A core part of the BNZ's campaign is that by cutting out brokers it can lower its costs to lenders.
This argument is an "interesting" one as BNZ disenfranchised brokers years ago when it refused to allow them to sell its popular Global Plus home loan. Hence brokers wrote very little business for the bank and the bank finally turned around and officially cut the ties.
As we reported the other day the claim has been challenged through a complaint to the Advertising Standards Complaints Board.
BNZ put up an argument, and illustrated it with numbers, to prove its case, that by not paying commissions it could offer cheaper mortgages. The majority of the board accepted its argument, consequently the complaint was dismissed.
I think on the whole the ASCB does a reasonably good job, but in this case it has been duped as BNZ hasn't shown any of the costs it incurs to sell mortgages through its mobile manager network.
For instance it took out the commission cost of brokers, but didn't include the salary cost of its staff.
If you add those costs into the argument then the ASCB decision may be quite different.
Does the board think that people walk into a branch, pick up a home loan off the counter and then walk out?
It is remiss of the board not to see through, or at least question, the bank's argument.
The redeeming factor is that a minority of the board did question the bank's argument - but not enough to make a majority.
Story: BNZ escapes censure - just
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