Property market reforms push borrowers towards non-banks

by Ksenia Stepanova22 Jun 2021

The government’s housing reforms, increased regulation, and tighter restrictions on borrowing have all been pushing more borrowers into the non-bank market, and Resimac’s head of New Zealand Luke Jackson said that he has seen a significant increase in interest from borrowers who have been turned down by the major banks.

Jackson said this interest has come from both the investors and first home buyers, and the investor interest has been particularly strong since the government’s March reforms.

“As the regulation increases, we would usually see more people going into that non-bank space,” Jackson said.

Read more: Lender passes on growth benefits by slashing prime rates

“We’re definitely expecting to see more investors and the first home buyers coming to us, and we’ve seen a change in the perception of what the non-banks are.”

“Non-banks still make up a small percentage of the total mortgage market in New Zealand, and the public perception has historically been that non-bank lenders charge horrific rates, and have large upfront fees,” he said. “Obviously with Resimac, that’s just not true.”

Resimac recently launched a 2.79% prime rate, which Jackson said is “probably the best one around in the non-bank space” at the moment.

When it comes to lending, he said Resimac takes a ‘pragmatic’ approach to assessing borrowers’ finances, but does not typically lend over an 80% LVR.

“For us, we’re really focused on the space of 80% LVR and below,” Jackson said.

Read more: Resimac reports record loan settlements over six months

“We do look at loans at 90% LVR, but our approach is more based around developing a pragmatic understanding of the client’s financial situation, and looking at their servicing from that perspective.”

“We tier our offers - the main two prime rates are at 70% and 80% LVR, and we’re offering one of the lowest rates that a non-bank has ever offered,” he added.

“I think that as customers learn more about what lenders like Resimac can do for them and how we work, we’re seeing many more customers becoming increasingly comfortable with going to a non-bank. We certainly expect to see more interest in our offering over the coming 12 months.”

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