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Non-banks to be run off their feet

Non-bank lenders will be run off their feet in the coming months, partly because banks are too traditional, according to economist Cameron Bagrie.

Friday, December 3rd 2021, 10:30AM

by Eric Frykberg

Cameron Bagrie.

In a webinar held yesterday, Bagrie said banks were increasingly sticking to what he called “Plain Jane” loans, while anything a bit more imaginative tended to be dealt with elsewhere.

He was speaking as New Zealand approaches the pinch point of rising inflation, rising interest rates, a risk of recession and serious Covid-derived economic worries. 

This was making the loan market a difficult business right now.

“At present, observed loan demand is less negative than the level of credit that is coming out of the banks,“ he said. 

‘What that tells me is that an awful lot of non-bank lenders are going to get run off their feet in the next six to nine months.“ 

Pressed on this, Bagrie said the banks themselves had been run off their feet in the past 12 months trying to keep up. Furthermore, they had cut back on the credit they were offering. This has left a vacuum that needed to be filled. 

“In addition, there are still deals that need to get done. They might be square pegs trying to fit into a round bank hole.

“The select niche providers are probably a bit more flexible. Banks have got the big wheelie box. (The loan application) goes in, if it doesn’t fit, it comes out with a rejection and (the would-be borrower) is left unaware of what went wrong.

“Banks are going to like the Plain Jane stuff, and anything that is a bit creative is going to get directed elsewhere.” 

Further in his talk, organised by Bluestone, Bagrie cast doubt on the OCR level rising relentlessly as had been universally expected just a few months ago.  

That is because of uncertainty not just in New Zealand but in China with its vulnerable property sector.

“If there is one thing we have never seen in our history is the OCR go up ten times in a row, yet that is what the market is saying. 

“If we get that, it will be an extraordinary set of economic conditions, yet that is what the market it expecting.“

Bagrie said there was too much uncertainty for the OCR trend to definitely be a clear, one-way journey upwards. 

At the end of his talk, Bagrie was asked what was the biggest challenge facing the mortgage advice industry in the next 12 months.

“Mind numbing compliance,” he replied.

Tags: Cameron Bagrie. Mortgage Advisers mortgages non-bank lenders OCR OCR forecasts

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 ▲5.95 ▲6.40 ▲6.59
ANZ Blueprint to Build - - - -
ANZ Special - ▲5.35 ▲5.80 ▲5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - ▲5.35 ▲5.69 ▲5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 ▲5.95 ▲6.29 ▲6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - 4.75 - -
Co-operative Bank - Owner Occ 5.85 4.85 5.35 5.65
Co-operative Bank - Standard 5.85 5.35 5.85 6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.95 5.45 -
Heartland Bank - Online 4.10 ▲4.40 ▲4.90 ▲5.10
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 5.00 5.75 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 ▲6.19 ▲6.69 ▲6.79
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 ▲5.19 ▲5.69 ▲5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 ▲5.55 ▲6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank - ▲5.65 5.79 ▲6.45
TSB Special ▲4.89 ▲4.85 4.99 ▲5.65
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.85 5.05 5.69 5.99

Last updated: 27 June 2022 8:43am

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