What’s next for mortgages?
BY PHILIP MACALISTER
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OPINION: The Bank of New Zealand hasn’t done anything normal in the home loan market for many years; and it doesn’t seem to have changed its ways recently.
The bank created headlines a number of years ago with its "Unbeatable" campaign. During this campaign it was the market leader pushing fixed rates, particularly in the two year space, down.
Part of the driver for the campaign was its decision not to distribute its home loans through mortgage brokers, even though brokers grew to control 40 percent of the market.
The logic for this move was from what you could call a domestic between the bank and brokers where it wouldn't allow them to sell its popular popular Global Plus loan product which offered borrowers Air New Zealand Airpoints Dollars.
Since then the bank has relied on its own mobile managers and branch staff. It claimed that these channels of distribution were more cost effective than brokers.
Well how things change. Last week all the chatter during the tea breaks at this year's NZ Mortgage Brokers Conference in Wellington was about BNZ sacking all its mobile managers.
The bank has confirmed this to Mortgagerates.co.nz, but the reasoning is not so clear.
One of the theories is that the bank may replace its mobile managers with brokers. A second is that the bank's parent, National Bank of Australia, has just bought the Challenger mortgage business. Challenger owns a group called PLAN which operates in New Zealand.
Maybe the bank will use all the PLAN brokers instead? However it PLAN says that isn't part of the plan.
The question is what does BNZ intend doing in this space? For years it has aggressively chased market share, and its mobile managers are a key part of that programme.
The answer appears to be that BNZ is pulling back in the home loan market and will leave it to the other banks to fight for business.
It does seem an odd move. One thing that borrowers which seems likely is that the bank won't be out there leading the market down with its rates. Or maybe it will be super-aggressive in cutting its rates to get customers into the branches? Last week it joined Kiiwbank in taking its floating rate down to historical low levels.
Philip Macalister is the publisher of www.mortgagerates.co.nz and the NZ Mortgage Magazine.
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My brother lives in the USA.
He just fixed his mortgage for 30 years at 5.4%!! That is the kind of stability I would like to see here. How come he can do that and we cannot?
I guess Alfred at #9 you have not been to New Zealand? BNZ is just a retail bank like ANZor Kiwibank not a central bank...that would be the Reserve Bank of New Zealand.
Anyways changes in strategy at BNZ are more likely closely aligned to significant changes in senior management - no more, no less.
@Alfred #9
BNZ is a corporation - a retail bank like many others in New Zealand.
You are thinking of The Reserve Bank - which is the central bank for NZ and sets regulation and economic policy including the base interest rate (with dubious effect).
#9 The central bank in New Zealand, is the Reserve Bank of NZ. Its the organisation that sets the official cash rate, and thats about it. Its not a trading bank like BNZ.
Maybe someone will enlighten me in this forum but isn't a central bank (I suppose BNZ is the central bank of New Zealand)supposed to guarantee price stability? I could understand if BNZ's mortgage business is a temporary patch because of the crisis. In that case nobody should be surprised the bank is eventually getting out. To those obviously unsatisfied commentators on this thread I suggest you elect your Lord of the Ring, the guy who found his wedding ring at the bottom of the sea, as a leader. He seems just capable of getting any job done.
"...seems likely is that the bank won't be out there leading the market down with its rates. Or maybe it will be super-aggressive in cutting its rates..."
About the most pointless sequence of words I have seen for a while.
Methinks the writer needs to learn to proof his ramblings before hitting send. Apart from a nonsensical ramble, the piece has glaring journalistic and grammatical errors
It's amazing to note that mortgage broker's have 40% market share, as their commission is a huge cost which the customer has to pay. Banks price accordingly. BNZ is the only bank that does not use brokers, this might why they make such good profits even though their market share is smaller that the other 4 big banks and can afford to give Flybuys and GlobalPlus points
At least this was interesting...quite unlike the latest splooge from Gareth"rent a quote" Morgan.
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