Mortgage advisers continue to grow share of Westpac's book

Mortgage advisers accounted for about 64% of the net new mortgages Westpac New Zealand wrote in the six months ended March.

That’s a slight increase from the 63% for the year ended Sept 30.

“We think brokers are a really important part of the market. Our bankers having great conversations with customers is important too,” chief executive Catherine McGrath told GoodReturns/TMMonline.

Advisers originated 55.2% of Westpac’s $68.98 billion mortgage book at March 31, up from 53.8% at Sept 30.

While Westpac’s mortgage lending in the latest six months at $1.51 billion was three times its lending in the six months ended September, it was still slightly shy of its market share at 15.7% of new lending by registered banks, up from just 7.6% in the six months ended September.

McGrath said mortgage lending in the latest six months was about 0.9% of Westpac’s market share but that its loans to first-home buyers “was well above our share.”

The bank’s lending to first-home buyers increased 12% by number to 3,463. The bank also lent $334 million on growing its lending on social and affordable housing through programmes such as shared equity, leasehold and Kainga Ora’s first home loans, which require just a 5% deposit.

The six months ended March in 2024 also saw a surge in lending, but McGrath said that doesn’t signal a recurring pattern.

“I’d like to have every half as a good half, so no, that isn’t a pattern, its happenstance rather than anything deliberate.”

Westpac’s net interest margin (NIM) grew three basis points in the latest six months after growing 12bp in the six months ended September, but McGrath said Westpac hadn’t sacrificed maximising NIM in the latest six months.

The 2.26% NIM in the latest six months compared to Westpac’s Australian parent’s group NIM of 1.88% but McGrath said if one compared the same activities of Westpac Australia, excluding non-comparable activities such as the Australian bank’s offshore operations, with the activities of the NZ subsidiary, the Australian NIM was higher.

While the parent provided a number of different NIM measures, including a 1.7% NIM for the Australian consumer business and 5.09% NIM for its Australian business and wealth activities, it didn’t provide a comparable number.

Westpac’s NZ result showed rising payments delinquencies, including mortgages with payments more than 90 days overdue rising to 0.54% of the book at March 31 from 0.49% at Sept 30 and those with payments more than 30 days overdue rising to 1.06% from 0.96%.

McGrath said although interest rates are falling, it takes time to flow through to borrowers since most are on fixed rates. A big proportion of the book will be refixing in the next three months, reflecting both that more customers are on floating rates or have fixed for shorter periods in the expectation that interest rates will continue to fall.

The Reserve Bank has cut its official cash rate (OCR) from 5.5% to 3.5% since August last year and is expected to cut to 3.25% later this month.

International rates tend to have a greater impact on mortgage rates fixed for two years or longer – Westpac briefly offered a three-year fixed rate at 4.99% but has since raised it to 5.19%, although it continues to offer a 4.99% rate for one year, 18 months and two years.

McGrath said it’s “hard to call” whether that 4.99% is the lowest we’ll see for such terms and “rates are bouncing around at the moment, but if her own mortgage had been due to reprice “I would have been quite happy” to refix at 4.99%. “Certainly, from my perspective, that looked like a pretty good rate.”