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Competition is coming for Heartland's online mortgages

Heartland Bank's online mortgage product could soon be facing greater competition as early as May next year when the four major banks have to be ready for open banking.

Tuesday, June 13th 2023, 6:00AM 3 Comments

The latest information Heartland provided to the market its online home loan receivables increased by 19.9%, or $27.6 million, to $302.3 million in the six months ended December.

Heartland relaunched the product in October 2020 after the arrival of covid put the kybosh on its earlier effort in March.

While it will lend only to owner-occupiers with a deposit or equity of at least 20% who are refinancing or purchasing a stand-alone house on a single section in a major New Zealand centre, Heartland promises decisions on applications “within minutes.”

In Australia, Westpac's parent bank launched a new direct-to-bank digital mortgage product in April and is promising unconditional approval of applications within 10 minutes by using open banking protocols to verify an applicant's income.

It told the Australian Financial Review that it had lent A$80 million in its first month.

But Heartland Bank chief executive Leanne Lazarus says her bank will welcome any increased competition.

“Heartland is supportive of open banking as it aligns with our digital strategy and commitment to reducing customer friction in the products and services we offer”.

“We welcome any increased competition that may come from the introduction of open banking and wider adoption of digital services and automation in banking,” she says.

Lazarus says Heartland is pleased with the growth it has achieved wit the online mortgage product and that its low-cost origination platform has enabled it to consistently offer market-leading or competitive rates.

“However, as a smaller bank, we operate in a very targeted part of the residential mortgage market with stricter eligibility criteria than the major banks,” she says.

Payments NZ is providing “the pipes” for open banking and is in the process of developing application processing interfaces, or APIs, and will ensure the four major banks with be alligned with the same version of the standards by May next year with the government-owned Kiwibank to follow in 2026.

Lazarus was coy about when Heartland would be ready to join the open banking system. “Heartland is currently considering its approach for implementation and timing” but it isn't concerned about the cost of compliance.

“This is, after all, in place to improve convenience and choice, and therefore support good outcomes for New Zealanders.”

Tags: Heartland

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Comments from our readers

On 13 June 2023 at 11:38 am valkyrie6 said:
So the shareholders of Payments NZ are all the main banks in NZ, does this mean they are all looking to reduce their current third-party business ie Mortgage advisers?
On 13 June 2023 at 11:51 am Veteran Charles said:
It is heartening to see that the book of Heartland Bank is still very small [I would say about 500 customers if each loan is, say $600k, probably fewer] and movement in a year was nominal. It is no wonder we never encounter them as opposition. They must be super-selective, as they say. The banks already have direct channels and yet the broker channel still flourishes and grows, I dont see that the fundamentals will change simply because open-banking becomes a thing. That is just my opinion, of course.
On 13 June 2023 at 1:35 pm KapitiKoastKid said:
Heartland won't lend on properties on the Kapiti Coast. Why?

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 12 June 2024 4:04pm

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