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New low equity charge for Westpac customers

Westpac will tomorrow introduce a new low-equity margin for lending with a loan-to-value ratio between 80% and 85% LVR.

Monday, April 29th 2013, 6:00AM 1 Comment

New borrowers with loans in that LVR range will pay an extra 0.25% on top of their interest rates. Existing clients will not be affected.

The bank had previously only applied a margin for lending above 85%.  It charges an extra 0.5% for borrowers with LVRs between 85% and 90% and 0.6% for loans up to 95%.

Banks are being required to hold more capital against housing loans. All charge something for low-equity loans but borrowers can often negotiate it down.

Westpac and BNZ charge a premium on interest rates but all of the others charge a one-off fee.

Kiwibank imposes the highest low-equity fee, of 0.5% between 80% and 85% LVR, and 0.75% between 85% and 90%. Above that, borrowers are charged 3% of the loan value. The fee is high because Kiwibank outsources its lender's mortgage insurance, which other banks self-insure.

ANZ charges a fee of 0.5% between 85% and 90% and 1.25% for loans over 90%. ASB's range from 0.25% to 1.2%. BNZ's premiums are charged over 85% and vary within the same range.

 

« Threats of OCR hike possibly a ploy: EconomistWestpac makes its one-year rate look good »

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Comments from our readers

On 29 April 2013 at 1:23 pm davo said:
The only ones that this policy will hurt is the first home buyer !!

Why not have these premiums based on loan outgoings vs net income and apply accordingly if we are talking about "risk weighting" - surely the RBNZ can come up with other ways to quiet down the apparent housing boom-ask anyone outside of Auckland/Christchurch and they will probably be unaware of this.

How about imposing these premiums on 2nd or subsequent housing or alternatively on purchasers who do not live and pay tax in New Zealand?? ... food for thought???

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 12 June 2024 4:04pm

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