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Last Article Uploaded: Saturday, October 23rd, 7:07PM


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One bank steps back from advisers – another comes forward

Kiwibank has entered the adviser market and has a pilot programme running with two dealer groups.

Monday, March 1st 2021, 9:43AM 2 Comments

The move comes as another New Zealand bank, TSB, steps back from the adviser market.

Kiwibank won’t name the groups it is working with. But chief executive Steve Jurkovich expects to start working with more groups later in the year.

“The biggest single trend in the (lending) market has been the growth of the broker,” he says.

Kiwibank’s adviser offering is technology-driven, cloud based and designed to give a seamless process.

Floating alone

Last year Kiwibank cut 100 basis points off its floating home loan rate and Jurkovich remains surprised none of the other big banks have followed the bank’s move.

He says it has been popular with customers; “Fifty per cent more people are choosing to take floating than a year ago.”

It’s a win for the bank and customers. The bank has higher margins on floating rates and borrowers get more flexibility, especially around repayment. Plus it provides an opportunity for customers to pay back their loans faster, save, or buy local and support New Zealand’s economy.

“We, like the rest of Aotearoa, are still waiting for the largest banks to respond to this challenge to lower floating or variable interest rates despite a very low interest rate environment and access to Reserve Bank funding.”

While most home loans are written on one and two year fixed terms, Jurkovich says Kiwibank has seen a significant pick up in customers using its floating rate.

The bank has seen a lift in applications overall. Previously it was getting around 750 a week and that figure has ballooned to between 1,100 and 1,150.

One of the ongoing issues for lenders is not all approvals result in drawdowns. While it is an industry-wide problem there is no way to fix it, he says.

In the first half of this year the bank opened a new expert lending hub at 155 Fanshawe Street in Auckland.

This is situated in a fast-growing part of the city where many of the big corporates are relocating to.

Jurkovich says the hub gives customers an experience which is more like a mortgage adviser and it offers the convenience of being able to discuss a mortgage during working hours.

He says the bank has hugely accelerated its adoption of digital processes. Covid-19 has driven this and has put the bank a number of years ahead of where it expected to be on its digital journey.

“Customers are also benefiting from improved processes resulting in shorter turn arounds for home lending decisions, a reduction in call-wait times despite a huge uplift in volume due to Covid-19,” he says.

The numbers

Kiwibank’s net profit after tax rose 8% to $55 million in the six months to December 31. Its operating income was up $10 million to $287 million.

Growth in home loans and business lending contributed to the result, with customer lending growth of $1.6 billion. Customer deposits also grew by $1.3 billion, Jurkovich said.

The bank’s home lending grew at around one and a half times system growth during the period.

Jurkovich says Kiwibank has got its balance right and it was not “filling its boots too much”. He described it as a “solid” result and said it was much better than what he would have predicted if asked a year ago when the Covid-19 pandemic started.

“We had forecast a significant rise in mortgage and business banking loan defaults, but numbers remain very low largely thanks to the hard mahi of all New Zealanders to contain the virus and keep our economy moving.”

Tags: Kiwibank

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Comments from our readers

On 1 March 2021 at 1:29 pm valkyrie6 said:
One question which seems rather important to mortgage brokers – last time a dealer group did a deal to get the BNZ back into the broker market and the commission and clawback policy was the worst the industry had seen in 15 years, hence another bank copied them straight away.

“’What’s the clawback and commission model been offered at Kiwibank?”
We sure as heck do not want Kiwibank been allowed into the broker industry now only to see them copying the BNZ clawback model and letting an overseas owned dealer group dictate what they want to help them monopolise their own dealer group market.

Hopefully the two dealer groups (well one really as they are both owned by the same overseas real estate company) understand the importance of the above (or maybe like last time they just don’t care).
On 2 March 2021 at 9:14 am Amused said:
Valkyrie raises an excellent point and all mortgage brokers if they care about their businesses should be asking the same question. Is there potential now with Kiwibank entering the broker market to impact the existing clawback models currently used by ANZ & ASB? This is the problem all mortgage brokers face now when overseas owned dealer groups do deals behind closed doors with no regard for the rest of the industry.

The same group in question let BNZ back into the market with no thought given to BNZ’s previous negative attitude towards mortgage brokers and within 12 months BNZ had introduced the most severe clawback model of any main bank which Westpac jumped at the opportunity to mirror. BNZ must be laughing! And now look at BNZ's service levels to mortgage brokers and our customers. BNZ continue to this day to tell brokers regularly that they aren't able to approve certain types of loans and then behind our backs offer these loans to customers via their branch network. None of the dealer groups seem to challenge BNZ on this proven anti-broker behaviour.

As another mortgage broker noted to me yesterday she doesn’t have a problem losing business to Kiwibank just because she isn't currently able to offer them as a lender to her customers. Kiwibank's home loan policy is not superior to the likes of ANZ so in terms of an advice recommendation they won't be standing out as a lender that brokers going forward will be recommending to customers. Based on past experience of how Kiwibank manage their back office operations I also seriously doubt that they will provide the extra resources needed to provide the service levels demanded by mortgage brokers, even with a cloud based system been offered. Experience has taught us at BNZ that these systems are only as good as the actual broker sending the application and as we all know BNZ regularly send email communications to brokers bemoaning the quality of applications they are receiving i.e. missing evidence of income, no bank statements etc.

If Kiwibank are allowed to enter the broker market now we simply cannot have a repeat of what has happened with BNZ.

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Lender Flt 1yr 2yr 3yr
AIA 4.55 ▲3.25 ▲3.75 ▲3.99
ANZ 4.59 ▲3.84 ▲4.30 ▲4.54
ANZ Blueprint to Build 1.68 - - -
ANZ Special - ▲3.24 ▲3.70 ▲3.94
ASB Back My Build 2.04 - - -
ASB Bank 4.45 ▲3.25 ▲3.75 ▲3.99
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - ▲3.24 ▲3.79 ▲3.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.70 ▲3.84 ▲4.39 ▲4.59
BNZ - TotalMoney 4.70 - - -
CFML Loans 5.15 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
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 Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 2.45 2.85 3.15
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank ▲4.00 3.80 ▲4.15 ▲4.50
Kiwibank - Offset ▲4.00 - - -
Kiwibank Special 3.75 2.95 ▲3.30 ▲3.65
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 3.05 3.45 3.75
SBS Bank Special - 2.55 2.95 3.25
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▲2.79 - -
The Co-operative Bank - Owner Occ 4.55 ▲2.99 ▲3.60 ▲3.89
The Co-operative Bank - Standard 4.55 ▼3.49 ▲4.10 ▲4.39
TSB Bank 5.34 ▲3.75 ▲4.20 ▲4.44
TSB Special 4.54 ▲2.94 ▲3.40 ▲3.64
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.84 ▲3.79 ▲4.39 ▲4.59
Westpac - Offset 4.84 - - -
Westpac Special - ▲3.19 ▲3.79 ▲3.99
Median 4.57 3.21 3.60 3.89

Last updated: 22 October 2021 8:59am

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