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Non-banks get Covid boost

Non-bank lenders have reported a flood of new customers turned away by the banks in the wake of the Covid-19 pandemic, as traditional lenders stick to conservative credit limits.

Friday, July 31st 2020, 5:03AM 2 Comments

Luke Jackson

At Financial Advice New Zealand's latest webinar, executives at non-bank lenders including Resimac, Bluestone, Avanti, Pepper and Liberty said they had seen an uptick in demand and business from advisers. 

Luke Jackson, Resimac's head of New Zealand, said of the company: "Throughout lockdown we were getting lots of comments from brokers about banks and non banks, about them pulling pre-approvals. So the way we responded was to drop our rates and match the main banks and provide an avenue to transact."

Jackson said the lender dealt with hardship requests through the lockdown, but added "65% of those requests have come out of hardship now". 

Asked whether she had seen the banks pull back in recent months, Sue Griffiths, head of sales at Bluestone, said retail lenders "had absolutely tightened up, creating opportunities for us as a non-bank lender". 

Griffiths said there was an opportunity for advisers, but said brokers needed to properly position the non-bank process with their clients, and outline differences with the bank channel.

Matt Nauer, group sales manager at Liberty, said there was a "sense of tightening around credit quality" at the banks. 

"We had tightened up, but we've come back stronger and are seeing an increase in applications," Nauer added.

Squirrel's John Bolton, who chaired the webinar, said it was important for advisers to talk with clients about the differences between banks and non-banks, including rates and the application process, at the beginning of discussions. Applying to a bank, only to be turned away, led to "bloody difficult" conversations about higher rates, he added.

Bolton said there was a huge discrepancy between the major banks' lending appetite. 

"I had a deal the other day where one of the major banks gave me $540,000, and the other gave me $875,000. For the same deal."

Tags: Avanti Bluestone Financial Advice New Zealand home loans John Bolton Lending Liberty mortgages non-bank lenders Pepper Money RESIMAC Squirrel

« Mortgage holidays set for extensionAvanti launches near-prime home loans »

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Comments from our readers

On 31 July 2020 at 9:31 am Andy the adviser said:
My question involves the Responsible Lending Code. Mainstream banks are turning down good deals with the excuse it does not fit the RLC. Yet non-bank lenders are able to approve the deals with a clear conscience.

How can that be? Either the banks are using the RLC as a VERY poor excuse for letting down loyal customers, OR the second-tier lenders are not bound by the code. Instead they can screw the customers with unreasonable interest rates in the guise of perceived higher risk, when repayment capacity should be the main criteria.
On 5 August 2020 at 9:41 am resnter said:
Its good to have other options but most of the deals I have with a few tweaks on their spending habits which from a conservative lender dont think they need tweaked as why cant clients have discretionary spending I can normally get them approved with main bank BUT then the goal post keeps changing "they fit today" but tomorrow maybe not! These people have good credit and history but may spend their left over money on coffee, takeaways etc banks are over the top on this big time! Glad second tiers are filling the gaps for short term anyway.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
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 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.95 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 3.05 2.99 2.99
SBS Bank Special - 2.55 2.49 2.49
The Co-operative Bank - First Home Special - 2.25 - -
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 2.55 2.69 2.79
Median 4.55 2.93 2.99 2.80

Last updated: 21 October 2020 8:48am

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