NZF re-adjusts high LVR loan structure

NZF added further mortgage insurance options to its loan products last Friday and re-adjusted the way it structures high LVR loans (80 - 95%).

Thursday, April 1st 2010, 4:08PM

Instead of the previous Low Equity Margins, which were added to base interest rates, NZF now offers a more competitive interest rate with only a 0.25% rate margin and will capitalise the LMI premium - into an Accelerator Account.

High LVR loans will be ‘split' into two parts - with the LMI portion in a separate floating facility to be repaid over a short term (between two and four years depending on the LVR). This LMI Accelerator Account will give the borrowers the opportunity to repay this portion of their loan faster, with no penalties.

"LMI is a necessary and inevitable cost on high LVR loans - and we feel offering clients the opportunity to pay this down as fast as possible is the right thing to do," NZF says.

In Expert Views economists say the recent decline in fixed mortgage rates is not having a big effect with very few new mortgages are being written in the two-year space and beyond.

BNZ economist Tony Alexander clears confusion for borrowers about the correlation between changes in the Official Cash Rate and what happens with bank lending rates and Reserve Bank (RB) deputy governor Grant Spencer says the RB expects to capture more mortgage borrowers than it has in the past when it starts hiking interest rates in the middle of the year.

On landlords.co.nz a survey released by RaboPlus shows that the government's pre-budget tax announcements have had a dramatic impact on confidence in investing in the housing market and Terralink looks at mortgagee sales which were down in January.

On the bright side, things are looking more positive as building consents continue to rise.

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