Sovereign takes more aggressive position
Sovereign’s decision to cut all its fixed rates by 15 basis points this week was a sign that it was taking a more competitive position in the market.
Friday, May 6th 2011, 7:02AM 2 Comments
Sovereign, which is essentially owned by ASB Bank, moves its rates at the same time and by the same amount as the bank. This week though it was only Sovereign which moved.
David Drillien says that Sovereign is taking a more competitive position in the market and this pricing change is one visible sign of that move.
The company's strategy is to use brokers to sell its home loans, but home loan sales are also used to sell life insurance.
Brokers who sold a certain amount of life insurance previously could offer home loan rates 15 basis points less than Sovereign's carded rate.
Drillien says the company is doing away with that position as most brokers qualified for the discounted rate, it was adding an extra layer of complexity to its offering, and it wasn't fair that the customers could potentially miss out on the better rate due to which broker they used.
Besides the rate cut Sovereign is loosening up its lending criteria and will be offering loans up to 95% of a property's valuation.
Drillien says there are some other initiatives being worked on with its home loan offering at the moment.
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Comments from our readers
Kiwibank are now losing deals to other banks that they were automatically writing 2-3 years ago when the other lenders limited customers to 80% borrowing only. With ASB/Sovereign, Westpac and yes even our friends at BNZ lending back up to 95% the fact that clients can save thousands with these lenders will see Kiwibank continue to lose market share.
I think most brokers would back me when I say that it is BNZ that are the most aggressive on market share at present as they seem to be able to write deals that the other banks have no appetite for. I’d add that some of these deals that BNZ are writing they probably shouldn’t be!
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