The smaller lenders have never been a better option for Kiwi homebuyers than now, says Mike Pero Mortgages chief executive Mark Collins.
“With interest rates at historic lows and swap rates increasing, the big trading banks are now seeking to claw back margin to make up for an extended period of reduced returns on assets.”
He said the big banks are limiting their lending options and are moving away from lending at the edges.
“What this means is it’s not taking much for borrowers to be turned away. In fact, the big banks are looking at borrowers very differently to how they did only six months ago.
“On the other hand, the smaller Kiwi-run lenders are still very good options for those looking for their first home or a good deal,” he said.
Collins said borrowers with floating rate mortgages could expect to see interest rates rise in 2017.
“While we haven’t seen much movement in the official cash rate, the big trading banks have already increased floating rates in order to recapture lost margin, which will put pressure on borrower’s back pockets.
“People should be aware their mortgage repayments may rise, but the key is not to panic. Being more open to going to the smaller Kiwi-run lenders is one viable option. More than ever, that means seeking trusted advice about accessing a wider range of lenders,” he said.