Banks face increasing competition this year
Non-bank lenders are set to take a bigger chunk of the mortgage market this year as tough competition gets even tougher.
Thursday, January 20th 2000, 12:00AM
by Paul McBeth
The advent of aggressive Aussies such as Wizard Financial Services - poised to open its first office here shortly - and a strong showing from existing players should push the New Zealand market closer to the Australian trend. There, non-bank lenders now hold more than 15 per cent of the mortgage market compared with around five per cent in this country. The growth of mortgage brokers is given some credit for this: in Australia, brokers handle 40 per cent of new home loans compared with only 17 per cent here at last count.
"Globally, non-bank lenders have captured significant market share from the trading banks," Sovereign's director home loans Paul Bravo said recently.
"Trends show this is being mirrored in the New Zealand mortgage market. The financial services arena in New Zealand has never been more competitive: the convergence of services and a lack of differentiation between what used to be separate operating areas is now the business norm."
Some of the players to watch for as the year progresses:
Wizard Financial Services: Australia's second largest non-bank lender is coming to town. It's setting up an initial network of ten outlets nationally, opening over the next nine months, with the first scheduled for Auckland in February. The Internet is its key distribution channel, putting it head to head with the likes of ASB-owned Bank Direct, and it's supported by mobile salespeople and satellite offices.
Sovereign: before Christmas, it claimed to now be the country's leading non-bank mortgage provider after reaching $1 billion in mortgage lending in just three years. Sovereign's mortgage arm was launched in 1996 and lent $606 million in the year to June 1999.
AMP Banking: officially got going last October, after the purchase of Citibank's retail arm and systems merging with AMP's former mortgage subsidiary Ergo. Plans to launch new products and services February/March; initially targetting AMP customers (there are around 400,000 of them)
Colonial New Zealand: has already announced plans to enter the banking market this year as part of an aggressive campaign to establish its position in the financial services sector. Quadrupled its local customer base after the purchase of Prudential, and able to leverage off its parent company's banking expertise in Australia (where it owns Colonial State Bank).
The Warehouse: has been doing its homework over the past year and could get round to offering financial and banking services during 2000.
Paul is a staff writer for Good Returns based in Wellington.
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