From Banking Day:
Australian non-bank mortgage lenders, such as Resimac and Pepper, are looking to ramp up their New Zealand businesses to take advantage of the new Reserve Bank of New Zealand limit on low deposit loans by banks.
But analysts say restrictions on funding, a lack of mortgage insurance and the sheer scale of the expected gap opened up by the restrictions mean it is unlikely non-banks will be able to substantially thwart the RBNZ’s goal of slowing lending and cooling double-digit house price inflation.
Resimac launched in New Zealand late last year and claimed naming rights on an office building in the Wellington CBD.
Resimac’s general manager of mortgages in New Zealand, Adrienne Church, said demand from brokers for low deposit loans in recent weeks had been so strong that Resimac had been forced to ration loans to existing broker clients who also arrange higher deposit loans so it could maintain a balanced portfolio.
Church said Resimac’s growth would have to come from both low deposit borrowers, with loan-to-valuation ratios of above 80 per cent, and those with LVRs of under 80 per cent.
…RBNZ figures show total non-bank home lending had fallen to NZ$1.8 billion by August, from $2.5 billion a year earlier and $7.7 billion in August 2007.
It will be interesting to see how or whether the RBNZ responds. One inherent limitation on the high LVR non-bank expansion is the lack of Lender’s Mortgage Insurance (LMI) in New Zealand, which withdrew after the GFC. The banks use internal LMIs.
