Kiwibank won't use mortgage brokers for now

The government’s Kiwibank isn’t planning to do business through mortgage brokers initially, but may consider doing so further down the track.

Monday, February 18th 2002, 8:06AM

by Jenny Ruth

"At this stage, we’re not using mortgage brokers, but we’ve not made a final decision as to whether or not we will consider using them when we have a larger operation,’’ says Kiwibank spokesman Bruce Thompson. "We do have our own team of mortgage advisers.’’

For the moment, Kiwibank has only seven outlets, not enough to involve brokers, and is focusing on getting the bank up and operating, he says.

Kiwibank has opened three branches in Palmerston North and four in Hawke's Bay this week in a program set to run for six weeks before the bank opens nationwide in April and May. The bank is expecting to have close to 300 branches operating by mid-year which would give it more outlets than any other bank.

Mortgage Brokers Association chairman Rob Tucker says his organisation hasn’t been approached by Kiwibank, although a couple of its members have approached Kiwibank and been rebuffed.

"From the association’s point of view, we’re not concerned. While it would be nice to have Kiwibank on board, we have plenty of competitive products which are just as cost effective etc,’’ Tucker says.

"Our members won’t be disadvantaged and neither will their clients.’’

Mortgage brokers would also want to be assured that Kiwibank has the physical capacity and systems to handle their business before they would want to risk putting clients its way. "When we sell a product, we want to know there’s a service to back us up.’’

Nevertheless, Tucker is somewhat surprised Kiwibank hasn’t tried to involve the broking industry. "With brokers writing 25% of the mortgage business, it would appear to be a bit short-sighted of Kiwibank not to allow us to do business with it.’’

Of the other New Zealand banks, only Bankdirect, which was specifically designed to operate without intermediaries, doesn’t do business through mortgage brokers. TSB Bank takes a two-tiered approach to the industry, not dealing with brokers on its home Taranki base, but encouraging their business elsewhere in the country.

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