Kiwibank’s low equity charges will drop when it moves to self-insuring its home loans. The bank has been one of the most expensive for high LVR borrowers, because it used insurance cover from Australian firm QBE Insurance.
It currently charges 0.5% between 80% and 85% LVR, and 0.75% between 85% and 90%. Above that, borrowers are charged 3% of the loan value.
A bank spokesman said: “Our charges will decrease but the actual amount of the charge will depend on the size of loan and the value of the security.”
Just under 20% of Kiwibank’s loan book is mortgages with an LVR of more than 80%. About $500 million of its $12.23 billion loan book is Welcome Home Loans, insured through Housing New Zealand.
The spokesman said with LVR restrictions coming, it would likely change the way that the bank's home lending business operated.
Kiwibank said there would be more costs to the bank but it would benefit from not outsourcing its risk. The bank had approached loans by assessing servicing rather than equity, so its lending appetite would not change with QBE’s departure.
None of the big four banks are affected by QBE’s move out of New Zealand.
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