NZCU Baywide to offer 95% mortgages
Hawke's Bay credit union NZCU Baywide has increased its LVR limit to 95% and will now lend up to $600,000.
Thursday, June 7th 2018, 8:16AM 
1 Comment
by Dan Dunkley
The credit union is not a registered bank and is exempt from the Reserve Bank's LVR restrictions. It has chosen to increase its self-imposed LVR restriction from 90 per cent to 95 per cent.
NZCU has also chosen to raise its lending cap from $400,000 to $600,000.
The credit union's bold move comes as non-banks seize the initiative and ramp up lending, as banks retrench from the market. Advisers have noted the major lenders have begun to make it more difficult for borrowers with stricter servicing tests and internal limits on lending.
Non-bank lenders including Bluestone and RESIMAC have accelerated efforts to win business from the big banks. Non-banks lent $2.2 billion in mortgage loans in April, compared to $1.8 billion in April 2017 and $1.4 billion in April 2016.
The credit union has about 30,000 home and personal loan customers across its branch and online network. The company recently revamped its online banking system to help its efforts to win new customers.
NZCU said its decision to loosen LVR and fee cap is designed to lure first-time buyers who may struggle to get on the property ladder. NZCU's marketing manager Melissa Abraham-Smith says: "The Baywide home lending story has always been about helping first home buyers. We are incredibly proud to have helped thousands of Kiwis achieve that first step on the property ladder. To keep the dream alive we have increased our LVR limit to 95% and our lending cap to $600,000."
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One would have to ask the question on why our 4 major banks are retrenching from the market, placing greater emphasise on a borrowers ability to pay based on 7% interest rate ?
Storm clouds appear to be on the horizon in the credit/ debt/ financial sector of our economy due in part to the huge and growing household, personal and company debt.
In the Press last Saturday I noticed for the first time in a long period, over 6 mortgaee sales of residential properties.
I would suggest most would fall into the "first property owner" category.
Maybe the observations and predictions of this writer is only notable to those of us with a little grey hair and can remember the financial recessions an real and tragic hardships of the past that affected all New Zealanders?
Banks had some serious input into creating such hardship.
The BNZ had to be bailed out by the then NZ Government to survive.
I would further suggest that many of the CEO's and bank managers today making financial decisions were only teenagers when New Zealanders faced many of the last most serious financial crisis.
It concerns me that it would appear that so many people are obsessed to get on the property ladder at any cost.
That a bank would use the words" to keep the dream alive, we are incredibly proud..., buyers who may struggle to to get on the property ladder..."
The question I would ask readers to think about is this.
With interest rates, unemployment, inflation at about as low as it will go, where will they go in the future?
the answer is so obvious but what isn't is when.
Factor in the huge consumer and personal household debt to the equation and then ask yourself do I have a safety net?
Digressing I know but consider this.
$10,000 invested in Xero shares 11 years ago would on todays market be worth over $420,000.
I can guess some of you readers will be thinking of the risk factor whenever the stock market is mentioned.
let me share with you the words of one of the greatest investors of all time Warren Buffet on risk.
"Risk comes from not knowing what you are doing".