New low equity charge for Westpac customers
Westpac will tomorrow introduce a new low-equity margin for lending with a loan-to-value ratio between 80% and 85% LVR.
Monday, April 29th 2013, 6:00AM 
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New borrowers with loans in that LVR range will pay an extra 0.25% on top of their interest rates. Existing clients will not be affected.
The bank had previously only applied a margin for lending above 85%. It charges an extra 0.5% for borrowers with LVRs between 85% and 90% and 0.6% for loans up to 95%.
Banks are being required to hold more capital against housing loans. All charge something for low-equity loans but borrowers can often negotiate it down.
Westpac and BNZ charge a premium on interest rates but all of the others charge a one-off fee.
Kiwibank imposes the highest low-equity fee, of 0.5% between 80% and 85% LVR, and 0.75% between 85% and 90%. Above that, borrowers are charged 3% of the loan value. The fee is high because Kiwibank outsources its lender's mortgage insurance, which other banks self-insure.
ANZ charges a fee of 0.5% between 85% and 90% and 1.25% for loans over 90%. ASB's range from 0.25% to 1.2%. BNZ's premiums are charged over 85% and vary within the same range.
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Why not have these premiums based on loan outgoings vs net income and apply accordingly if we are talking about "risk weighting" - surely the RBNZ can come up with other ways to quiet down the apparent housing boom-ask anyone outside of Auckland/Christchurch and they will probably be unaware of this.
How about imposing these premiums on 2nd or subsequent housing or alternatively on purchasers who do not live and pay tax in New Zealand?? ... food for thought???