Acquisition opens up market for NZ Mortgages

As the country’s stock of mortgages continues to grow, Christchurch-based NZ Mortgages, now majority owned by Squirrel, is planning to be writing $1 billion of the $364.5 billion New Zealand total every year.

Wednesday, November 6th 2024, 6:42AM

Squirrel took a majority stake in NZ Mortgages about six weeks ago and is busy merging the back office functions of both advisory firms.

In an interview with TMMO, NZ Mortgages managing director and head of lending Nathan Miglani has stayed on in the business he founded as a solo adviser in 2017. Since then it has expanded to 20 staff and is writing $600 million in mortgages a year.

He says the business is benefitting from Squirrel’s big player status in the market when it comes to IT, compliance, technology and accounting. “It is looking after all the back office functions, so we can focus on mortgage advising.

Miglani says he was unable to expand further because there was too much to do just running the business. He is now looking at increasing business across the whole of the South Island, firstly targeting Nelson and then Otago. “Nelson is a great opportunity,” he says.

His existing business is run on six advisers and he will start recruiting in the new year to gradually increase the team to 10 good quality advisers in the next six months. Their training will be handled in-house by Miglani.

“There is still a lot of water to go under the bridge because these types of mergers are quite big when it comes to the day-to-day operations in making it work.”

Miglani says he has always looked up to Squirrel. “The level of technology it has is a leader in the sector.” He says the industry is changing rapidly and people expect an answer to their questions promptly and advisers can only be efficient if they have good technology in the background.

Eventually NZ Mortgages will merge with Squirrel, but Miglani says at this stage it is a new website face for NZ Mortgages powered by Squirrel.

He expects the back office merger to be completed in a couple of months. “Both companies values align on industry issues and it was the right time for Squirrel to take a majority stake.”

Squirrel's acquisition of NZ Mortgages is its second big acquisition in recent years. It acquired Wellington-based The Home Loan Shop in 2022.

Chief executive David Cunningham, says the latest move marks an important next step in its mission of becoming an iconic New Zealand brand with a nationwide presence, and waking Kiwis up to an easier way of getting a home loan.

Short-term mortgages grow exponentially

While mortgage holders chase short-term fixed rates in the anticipation of more Reserve Bank OCR cuts later this month and into next year, NZ Mortgages has seen a recent big uptick in the number of investors buying again.

The business has done the same number property investor mortgages in the past two months as it did for the whole of last year.

Miglani says it has been exceptional, but in some ways expected because of the RBNZ’s recent aggressive OCR cut on top of a smaller one in August.

New figures from the RBNZ show most mortgages are now on six month fix terms as borrowers believe they can get even cheaper rates when they refix.

Up to the end of September, $146.4 billion of mortgages were fixed for six months or less, while $39.8 billion was floating. This means just over 51% of the mortgage pile is either on six month fixed terms or floating. Two years ago it was at 31.8%.

Tags: mortgages