Lending policies changing rapidly

Joel Oliver, managing director of Auckland-based advice business SuperCity Mortgages, says the shock from Covid-19 has caused banks to adjust their lending policies, making things difficult for borrowers. 

Reduced cash-back offers, tightening of controls around investor lending and reluctance to take on new borrowers have been a feature of the market since the Covid-outbreak.

"We saw this exact same thing in 2009 after the GFC, and also a bit in 2013, when responsible lending came into play," Oliver says. "After these events, banks are finding their feet and eventually they level out to the same viewpoint."

Oliver notes the vast difference in banks' treatment of investors. BNZ has tightened credit conditions for all borrowers, and the rest of the big four are reluctant to lend past 70% LVR to investors, despite LVR rules being scrapped. Kiwibank, on the other hand, is said to be supporting investors with loans above 70% LVR since the Reserve Bank changes. 

Oliver believes the changing lending policies will lead more customers to seek advice, as banks become increasingly selective. 

"I've been the busiest I've ever been over the past four weeks," Oliver says. 

He believes Kiwibank is the only bank providing loans to investors above the 70% mark: "They're the only bank allowing these deals to happen." 

Kiwibank only deals with a handful of advisers, but Oliver hopes the bank will widen its adviser network in the years to come.

"They don't have the same resources as the Aussie banks but Steve Jurkovich sees advisers as valuable to their business."

Despite record-low rates, it remains a difficult market for borrowers. While banks have stuck to strict internal credit policies and limited cash-back offers, Oliver believes advisers can benefit from the changing lending market.

"It's almost impossible for a new customer to go to one bank and be confident they will have the best terms and rates ... It's our job to keep up to date with all of the changing lending policy statements. Now more than ever, people need a mortgage adviser in their lives."