Kiwibank's home loan guarantee challenged

Kapiti-based mortgage broker Simon Rule says when it comes to mortgages with loan-to-valuation ratios (LVRs) above 90%, he can't see how Kiwibank's loans can possibly be cheaper.

That's because Kiwibank is still using an external insurer, Australia-based QBE, for such loans and charges low equity premiums of up to 4.18% on a mortgage with an LVR of 95%.

"Most banks charge a maximum of 1% of the loan amount borrowed as a one-off low equity premium," Rule says.

On a mortgage of $605,000 with a 95% LVR, Kiwibank can charge a one-off premium of up to $25,289 while ASB Bank would charge only $6,050, Rule says.