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Heartland leaves home loans to the banks

Heartland New Zealand has decided not to even try to compete on price in the residential mortgage market, says chief executive Jeff Greenslade.

Thursday, August 30th 2012, 8:29AM

by Jenny Ruth

"We don't think the risk/return is there long term. We'll leave it to the big banks to slug it out between themselves.”.

Heartland's mortgage book fell by $68 million to $324 million in the year ended June, reflecting both mortgages amortising and customers taking advantage of very sharp interest rates offered by competitors to refinance.

“The mortgage market in New Zealand is very commoditised. By and large, it's no longer a relationship product.”
Instead, the primary driver of mortgage business now is price.

Greenslade says although Heartland will continue to provide mortgages as required, it favours replacing this low margin business with higher value motor vehicle loans which are “inherently high margin and low risk” and tend to perform as well as mortgages.

Greenslade says he expects very low credit growth to continue over the next five years and therefore the focus will be on profit margins. He also expects a lot more switching. “If you want to grow, you're going to have to take customers from someone else.”

While non-residential property is no longer part of Heartland's core business, it still had a $161 million portfolio at June 30, down from $187 million a year earlier.

The company has now fully utilised the $30 million buffer provided by its arrangement with Pyne Gould and will have to take any further losses itself.

Greenslade says the original agreement covered $140m of property loans and the residual assets are between $90m and $100m (there's another $60m inherited from the building societies in the early 2011 merger which are regarded as non-core but which are performing well).

The remaining book is "not entirely pristine" and "has its challenges" but has become a lot more predictable, he says.

« SBS mortgage book shrinks againCo-operative exploits temporary window to grow low equity mortgages »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 5.65 5.55 5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society ▼8.60 6.75 6.40 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 5.95 6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.49 6.49 6.49
TSB Special 7.89 5.69 5.69 5.69
Unity 7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.10 6.05 5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.02 5.79 5.69

Last updated: 20 November 2024 9:45am

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