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Brokers have role as banks turn off tap

Mortgage brokers can play a vital part in the market at the moment, helping people with small deposits understand what they might be able to borrow, one adviser says.

Thursday, February 27th 2014, 4:00PM

by Susan Edmunds

The latest Reserve Bank statistics for January show that the banks’ level of lending to borrowers with a deposit of less than 20% dropped yet further in the month, from 4.7% in December to 3.8%.

They have to restrict it to less than 10% of their new lending.

David Windler, of the Mortgage Supply Co, said a difficult situation had developed where banks were starting to become more willing to lend to low-deposit borrowers because they realised they were well under the target – but did not want to communicate that too widely and open the floodgates.

“Advisers are perfectly placed to be the go-to source,” he said.

Many banks have taken a few months to get to grips with the new rules but were now finding they had space to lend, he said. But consumers did not understand the situation. “Borrowers have not got a very strong idea of what they can and can’t do.”

He said it was still a matter of shopping around – a lender who turned down a low-deposit borrower one week might find the next that they did have the capacity to lend after all.

Windler said advisers could approach six or seven possible lenders on a client’s behalf and find out who had capacity.

“For good applicants, more lenders are seriously considering lending to them.”

Windler said he was also processing more Welcome Home Loans, even in Auckland. “Changes in the income and property price limits have helped.”

Bruce McLachlan, of The Co-Operative Bank, said his bank had noticed a very sharp reduction in demand because of the publicity about the loan-to-value restrictions. “So many believe that unless they have a 20% deposit, there is no chance. The Reserve Bank has restricted supply and the media and publicity has reduced demand. It’s not like we’re turning a lot of people away.”

He said his bank did about 6% lending to low-deposit borrowers in January.

« Short-term fixers keep market competitive: ReportTide about to turn on low equity loans »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.69 ▼2.69 ▼2.99
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 ▼2.69 ▼2.69 ▼2.99
ASB Bank Special - 2.69 2.69 2.99
Bluestone ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 2.69 2.75 2.99
The Co-operative Bank - Standard 4.40 3.19 3.25 3.49
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.17 3.22 3.12

Last updated: 16 July 2020 2:33pm

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