Sovereign axes lo-doc lending
Sovereign Home Loans, one of the most popular non-bank lenders in New Zealand, has announced further tightening in its lending criteria.
Friday, October 3rd 2008, 9:22AM
by Maria Scott
Sovereign says that it will process loans that have already been fully or conditionally approved under its old criteria but approvals given in principle will be processed under the new rules.
This is the second time in little more than a month that the lender has tightened its criteria. At the beginning of September it increased prices on a range of products and stopped lending on certain types of properties, including high density apartments and leasehold properties.
Mortgage brokers said at the time that they did not think the changes would dent Sovereign’s popularity with brokers.
However the latest decision to axe low-doc lending may come as a blow as it will further restrict choice for brokers and clients in a part of the market where few lenders are still active.
Sovereign has been promoting sales of insurance through brokers and says that it is planning further changes to promote and encourage risk insurance cross-selling. It will be holding a series of meetings over the next few weeks with advisers and heads of broker groups to discuss these plans. This process will include asking home loan advisers for information about their cross-selling activity.
“The relationship between risk insurance and lending remains fundamental to Sovereign’s business model and is especially important in the current environment,” the company says.
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