New owner gives Wizard better fixed rates

A major benefit to Wizard Home Loans from its new owner, GE Money, is that it can now offer far more competitive fixed interest rates.

Thursday, March 3rd 2005, 6:11AM

by Jenny Ruth

"It’s always been fairly obvious that we’ve been a very competitive floating rate provider but we’ve never been able to hold a competitive position on our fixed rates," Wizard New Zealand boss John Grant says.

Grant says that is changing as Wizard’s loans are moving from being financed through securitisation to balance sheet funding.

Under the old model it was a challenge to adopt Wizard to New Zealand conditions.

While roughly 70% of Australian home-owners take out floating rate loans, about 70% of New Zealand home-owners are hooked on fixed rate loans.

GE bought Wizard’s Australia-based parent company Australian Financial Investment Group, which also owns mortgage funds wholesaler AMS, in October last year for something over $A400 million, depending on how AFIG performs.

Wizard’s current one and two-year fixed rates are both 7.5%, below Bank of New Zealand’s recently announced discounted two-year rate of 7.6%.

The other major bank’s one and two year fixed rates range from 7.7% to 7.8%. It still isn’t as competitive on longer term lending, its three and five-year rates at 7.95% while the major banks are offering 7.8%. (Compare rates here)

Grant says Wizard moved to address the area where most people borrow first and will be progressively moving to balance sheet funding for longer-term loans.

Only about 6% of lending in New Zealand is fixed for longer than two years, he says. "We will be addressing that. It’s just not one of our priorities."

Another benefit from Wizard’s new parent is that its branches can now offer GE’s consumer finance products such as personal loans and car loans and non-conforming loans.

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