NEWS

Kiwibank’s adviser push gets rolling

Kiwibank is ramping up its push into the mortgage adviser market signing up more and more firms. “We do see [the] adviser market as a really strong opportunity for us,” chief executive Steve Jurkovich told TMM.

He says in the past four months it has brought on 35 new adviser accounts (including firms and groups), and he expects to add up to 50 more “connections” in the next six months. “We are finally making some progress reaching into the adviser market,” he said.

Progress had been slower than expected, mainly due to technology issues. These were not at the bank but largely to do with integrating Kiwibank into adviser CRMs. “We have been frustrated a bit with tech,” he says. “I was a little bit unreasonable on the timeline,” Jurkovich adds. "Now it’s a matter of being patient."

Kiwibank’s offering is cloud-based and is designed to make the bank easy to deal with. Jurkovich says one of the ongoing issues in banking is the lack of transparency. With its offering advisers can see at what point deals are within the bank and can see timing and pull through rates.

Jurkovich says this allows advisers to “hold us to account”, and hopefully do more deals with Kiwibank. It’s also about efficiency: “We don’t want to put brokers through double keying everything.”

Overall around 30% of Kiwibank’s home loans are originated through brokers and advisers, including its fully-owned subsidiary NZ Home Loans. Jurkovich reckons around 50% of home loans are originated through advisers and he wants to see Kiwibank get to that level.

As for the overall market, he expects advisers to increase their market share. “North of half of [the] market works with advisers,” he says. “I don’t think that is ever going to change. The genie is out of the bottle.” Customers enjoy the ease and convenience that advisers offer.

Kiwibank’s profit for the 12 months to June 30 rose from $57 million to $126 million. Overall, net lending was up by $3 billion, an increase of 13%. Residential mortgage lending grew by $2.2 billion, an 11% increase in the year.

Avanti closes out biggest ever NZ securitisation

Avanti Finance has raised $350 million in its recently completed securitisation, making it the largest amount sourced from this kind of transaction in New Zealand’s history, to date.

The funds from this most recent raise will be used for growing Avanti’s mortgage loan book, and Avanti has strong funding to support continued growth in the rest of the business.

“With this increase in our funding capacity, we’re excited to be able to continue to support the mortgage adviser community who have been an integral part of our success in this market,” chief executive Mark Mountcastle says.

Avanti Finance provides a broad range of finance solutions to the New Zealand market, including personal loans, vehicle loans, business loans and home loans, directed primarily at customers who are not served well by the main banks.

Most recently, the business has released several new products aimed at the “near prime” market.

“We’ve seen a significant amount of interest in our new near prime home loan product and car loans, as well as in our open bridging solutions,” Mountcastle says. “It’s our innovative products that are a big reason for our continued success. They meet New Zealanders where they are, not where the banks need them to be. It’s why investors, both current and new, have shown such interest in assisting the funding of these products.”

Borrowers flock to three years

Mortgage advisers are seeing a noticeable jump in the number of home buyers preferring the three-year fixed rate term for their mortgage interest rates, data from independent economist Tony Alexander’s August mortgage advisers survey shows.

The Reserve Bank has held off raising the official cash rate in light of uncertainty surrounding the latest nationwide lockdown duration and impact.

But the bank has made it clear it sees the economy as growing at a pace faster than resources can keep up. That means rising inflation from the already high mid-July rate of 3.3%.

It is highly likely the cash rate will be raised at the next review on October 6, if not earlier, and the Reserve Bank has signalled its expectation the cash rate will now have to rise by about 0.25% more than it was considering in May.

With increasing talk of mortgage rates rising, the survey shows a clear shift by borrowers to protect themselves against the rate rises to come.

The latest Covid-19 outbreak has actually provided them an increased length of time in which to get that protection before the official rate rise cycle commences, says Alexander.

For the first time since just before the March 23 tax announcement, there are more mortgage advisers saying they are seeing more first home buyers seeking advice than fewer. A net 3% have reported more compared with a net 10% reporting fewer first-time buyers last month and a net 15% in May.

This result is consistent with many other results from similar surveys of market activity in that there is recovery underway after the initial sentiment slump from late-March.

In contrast to first home buyers, there has been a drop in inquiry to mortgage advisers from investors. A net 48% of brokers have reported they are seeing fewer investors seeking advice. This reverses the improvement to -19% in July and takes the decline in investor activity back to near the -53% net result of June. ✚