BNZ rewards higher-equity borrowers

It is offering a HomeAdvantage MasterCard special, which offers mortgage borrowers credit card purchases at the same rate as BNZ’s standard floating rate, currently 5.99%. The card accrues Fly Buys points.

There are no annual account fees. Borrowers must have equity of more than 20% and a BNZ transaction account that their income is paid into.

It is part of banks’ ongoing push to attract higher-equity customers. They are only allowed to lend 10% of their new loans to people with a deposit of less than 20%.

Having more borrowers with a loan of less than 80% enables them to lend more loans to people with smaller deposits.

Symons says the offer will make BNZ more attractive to other banks’ high-equity customers who might then switch over. But he said the idea came out of a desire to reward people who had good relationships with BNZ. “In times where the Reserve Bank has made it much more difficult and complex to do high-LVR lending, how do you recognise the customers who have more equity, with preferential treatment?”

He said there had already been reports of customers who were thinking about shopping around for a new lender and had decided against it. Others who already had a BNZ credit card had decided to bring their home loans across, too.

Adviser Lisa Dudson said while the deal had been packaged attractively, it would work out the same as someone using a revolving credit home loan to pay off their credit card.

But she said it might be easier for some people to manage their money this way. “With a revolving credit, everything is in one big account, it’s a nightmare to manage and for a lot of people it doesn’t work effectively. If you can put purchases on a credit card at 5.99%, then that works out quite well.”

She said it was likely that other banks would follow suit as competition heated up. “It’s another market acquisition strategy.”

Dudson said early indications were that a number of second-tier lenders were also readying for a push into the market early next year, to pick up some of the low-deposit borrowers who were not able to find a loan.

“The [LVR restrictions] is a very, very tough regime to try to work with. We’re working extremely hard to comply in every way with the rules and spirit of the requirements. We continue to work hard to adapt our processes and approach to this. We’re still managing to do lending to first-home buyers but it’s been made very, very tough by the new requirements.”

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Comments from our readers

On 22 November 2013 at 9:40 pm rachel said:

Interesting, I've been with BNZ for decades and wanted to take out a home loan with them, but they refused to even match the offer I'd had from another major bank, so I'm moving my money/banking away from them. In fact, they offered the least attractive package.

BNZ rewards higher-equity borrowers

BNZ’s latest home loan offer was a way to recognise customers who had more equity in their properties and reward those who had a “main bank” relationship with the bank, its head of retail, Andy Symons, says.

Tuesday, November 12th 2013, 3:35PM 1 Comment

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