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Advisers welcome new mortgage entrant

Advisers have welcomed Simplicity's entrance into the mortgage market, but doubt whether the 2.95% home loan product will have a major impact.

Tuesday, October 8th 2019, 9:50AM

Simplicity last week unveiled plans to start lending to first home buyers with a floating rate of 2.95%. The product is available to Simplicity KiwiSaver members who have held their retirement fund for one year.

The loan is only available direct to customers. Yet advisers have welcomed another new entrant, as a growing number of non-banks, second-tier lenders, and alternative players come into the market. 

Craig Pope, of Wellington-based Pope & Co Mortgages, described the move as "interesting", and a "good way of getting people on board for their KiwiSaver". However, he warned borrowers the product may not be as attractive as the headline rate suggests. 

Pope said customers should also consider cash-back incentives and service alongside the headline rate they get.

"People with 20% deposits often want cash-back incentives, so how are they going to approach that? Also, first home buyers often need a bit of hand-holding through the process, and that's why the banks charge a margin. First home buyers are often labour intensive," Pope said.

Glen McLeod, of Edge Mortgages, added: "It's a big play, good on them. It's an interesting proposition and it will give people a lower rate, but I'd like to see the full credit criteria. The $50 million they have to lend will be gone in 20 minutes, so it's not going to be for everyone."

Simplicity will start lending in December via a ballot system, to customers with a 20% deposit.

McLeod said many first home buyers would be unable to afford a 20% deposit in markets like Auckland. Pope questioned how the firm would help "green first home buyers" that did not qualify.

Simplicity managing director Sam Stubbs told TMM Online the firm will refer non-qualifying customers to their local mortgage broker. 

"We will build out a referral process to mortgage brokers (with no fees or economics) for members who don’t qualify for our mortgages, because going to a broker is nearly always better for the client than going to a bank directly," Stubbs said. "It’s simply in the best interests of our clients and the right thing to do."

"How we will select brokers to refer clients to is yet to be determined, but it is likely to be to a few trusted brands and organisations in each region," Stubbs added.

 

 

Tags: KiwiSaver Lending mortgages Simplicity

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.29 3.45 3.85
ANZ Special - 2.79 2.95 3.35
ASB Bank 4.45 ▼3.35 ▼3.19 ▼3.85
ASB Bank Special - ▼2.85 ▼2.69 ▼3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - ▼2.79 ▼2.69 ▼2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.39 ▼3.29 ▼3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.80 2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC ▼4.40 ▼2.95 ▼2.95 ▲3.69
Kainga Ora 4.43 ▼3.29 ▼3.39 ▼3.85
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - ▼2.65 ▼2.79 ▼3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - 2.99 3.05 3.69
The Co-operative Bank - Owner Occ 4.40 ▼2.79 ▼2.95 ▼3.39
The Co-operative Bank - Standard 4.40 ▼3.29 ▼3.45 ▼3.89
TSB Bank 5.34 3.59 ▼3.59 4.19
TSB Special 4.54 2.79 ▼2.79 3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.79 ▼2.69 ▼2.79
Median 4.55 3.32 3.39 3.69

Last updated: 28 May 2020 10:38am

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