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How good are your systems?

Mortgage brokers will need to ensure that their processes provide enough evidence that they’ve assessed the suitability of each borrower’s loan under the Credit Contacts and Financial Services Law Reform Bill.

Monday, March 31st 2014, 6:00AM

by Susan Edmunds

The Bill was reported back from select committee and progress on it will resume when the House returns on April 8.

Financial Services Federation executive director Lyn McMorran said her members broadly agreed with the principles of the bill  and did not envisage any difficulty in meeting its Responsible Lending Code once one is finalised.

But she said there were concerns about how it would be policed when it was in place. That responsibility will rest with the Commerce Commission.

McMorran said: “As is the case with all the financial regulation over the past few years, the responsible people, whether that’s lenders or financial advisers, deposit takes or investment managers, the responsible people always comply comply… it’s the unethical ones who always find a way around it. The key to stopping that is how they enforce it.”

She said everyone in the market would have a role to play in reporting substandard activity.

The main change for mortgage brokers would be the requirement for extra vigilance in demonstrating the way they are behaving responsibly, she said.

She said brokers tended to be the initiators of loans and they would need to be able to prove that they had adequately assessed whether borrowers could meet their repayments. “Do their processes provide enough evidence that they’ve had those significant conversations with borrowers, verified it through bank statements and credit checks?”

The select committee stage gave the Bill more powers including a prohibition on charging borrowers commission for credit-related insurance when that insurance is to be financed under a consumer credit contract.

McMorran said that was a major concern and was a common situation. But consumers could miss out on protection with the law change. “Why would you offer insurance if you’re not going to be paid?  We have insurance companies as members, who provide products into financial services businesses. One said 100% of its credit contracts insurance is funded by the loan, that accounts for a significant amount of that particular company’s business.”

McMorran said lending and insurance should be encouraged to go hand-in-hand to offer protection for consumers. “I can’t understand the thinking behind it at all.”

She said another concern was the addition of a clause that allows disputes resolution providers to award compensation for non-financial losses, such as inconvenience.

« Low-equity fees face legal questionsRBNZ could relax LVR rules: Westpac »

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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 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
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 - 7.24 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 7.84 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 - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 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 6.69 6.45 6.19
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 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
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 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 28 March 2024 9:42am

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