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Financing property deals getting harder

Sunday, February 10th 2008, 2:46AM 2 Comments

by Philip Macalister

Anyone looking for finance for a property purchase at the moment may well be having trouble finding money from lenders.

We are hearing a bunch of interesting stories at the moment. The first is that following the global “credit crunch” banks are becoming far more conservative about what sort of deals they will lend money on.

Macquarie put out a research paper on this subject. While the paper was Australian-based the same is happening in New Zealand (after all most of our big banks are owned by the Okkers).


Secondly we have heard stories where brokers have taken good deals to banks, expecting to get them accepted, but the opposite has happened. They said no. This was particularly bad around Christmas, and, according to this broker, lenders have mellowed slightly.

This suggests property investments that are negatively geared or a little speculative in nature may not get a loan.

Added to this situation is increased volatility in world markets that is making it hard for lenders to manage their books. Interest rate comparison site, www.goodreturns.co.nz, has reported that Westpac has withdrawn its two and three year capped rate products from the market and that Wizard has withdrawn five year terms. Also a number of non-bank lenders have pulled longer maturity lo-doc loans.

This is happening at a time when some people like the longer term rates as they are the lowest in the market (albeit at historically high levels).

If you have had trouble getting finance please drop us a line or leave a comment below.
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Comments from our readers

On 11 February 2008 at 4:11 am Kim Lyons said:
We have certainly noticed that all lenders have reviewed criteria in view of current finance squeeze and the slowing property market.

As mortgage brokers though this has lead to an increased level of enquiries for both bank deals and the higher risk finance company proposals.

Common enquiries have been refinancing to consolidate debts, bridging finance and open ended land bank / subdivision / spec builds.


We have had a very good success rate with this new business but have often had to look outside the Banks and our traditional funders, revisiting lenders we may not have dealt with for sometime.

The good news is that there are still funders who are keen to do business although they may have put both interest rates and / or fees in the current maket.

Another option being considered by clients is to only pay part of interest choosing a rate of say 6.0% and having part of the interest capped onto your home or investment loan for a fixed period. You must have good equity & history though for this to be possible


Same as ever, do not give up on achieving your goals just becase one person says no!

Kim Lyons
First Rate Mortgages Limited
Mobile 021 739922
www.firstratemortgages.co.nz
On 11 March 2008 at 3:55 pm Not all bad news for property market « Landlords.co.nz Weblog said:
[...] all bad news for property market A couple of months ago I commented that getting finance for property deals was getting harder and harder to obtain and that lending [...]
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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.15 ▼4.04 4.49
ANZ Special - 3.65 ▼3.54 3.99
ASB Bank 5.20 4.15 4.09 4.39
ASB Bank Special - 3.65 3.59 3.89
BNZ - Classic - 3.65 ▼3.54 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 ▼4.15 ▼4.09 ▼4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 4.30 4.34 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.59 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 5.30 4.86 4.14 4.19
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.69 3.69 ▼3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.65 3.59 3.99
The Co-operative Bank - Standard 5.15 4.15 4.09 4.49
TSB Bank 6.09 4.65 4.59 4.85
TSB Special 5.29 3.85 3.79 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - 3.65 ▼3.54 3.99
Median 5.35 4.15 4.09 4.19

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