From the New Zealand Herald...
4:00AM Monday Feb 16, 2009
By Maria Slade
4:00AM Monday Feb 16, 2009
By Maria Slade
Some non-bank mortgage lenders trying to exit the New Zealand home loan market are being accused of making life hard for customers in order to encourage them out the door.
Mortgage brokers and other intermediaries in the industry say it is virtually impossible to get any service on the loans or to make changes to them, and the lenders are resolutely charging interest rates way above the market average.
"In one case they said to me that 'we're keeping the interest rates high, we've got no obligation to reduce them, and we're quite happy if borrowers want to take their mortgages elsewhere'," said Peter Seers, of finance broking company Moneyscience.
"They're taking the opportunity to take some extra profit as well."
One Auckland property investing couple had seven loans on small central city apartments through trustee company Trustees Executors.
They believe the funder of the loans was fund manager Tower, which closed its $242 million Mortgage Plus fund in April.
Last year, Trustees Executors wrote to the couple saying their loans would not be rolled over because the lender no longer had funding.
The wife said they managed to refinance five of the loans. But because the apartments are smaller than 40 square metres in size - which banks are reluctant to lend on - by the end of the year lending criteria had tightened to the point where they could not find a new financier for the remaining two.
Despite the fact that bank home loan rates were now at around 6 to 7 per cent, Trustees Executors was charging a floating interest rate of 11 per cent and would not drop it, the woman said.
She said Trustee Executors had been difficult to deal with, and only a skeleton mortgage staff remained. "They just didn't want to know."
Trustees Executors did not return the Business Herald's calls.
Meanwhile, a Hamilton property investor is having to pay GE Money a $25,000 break fee on a fixed-term loan with 18 months to run, after the financier refused to transfer the security for the loan to another property.
GE announced in October that it was pulling out of the New Zealand home loan market.
The Hamilton man currently owns four houses, but is having to sell one in order to repay a debt to a friend.
He and his wife are currently renting, and were happy to buy another house to live in and transfer the loan at its current 9.45 per cent interest rate to the new property.
The man said he did this about a year ago with another non-bank lender. "We're quite prepared to put up other security and just carry on with the mortgage. But because [GE] are unwilling to it's forced us to take a $25,000 hit."
Another intermediary in the industry said he had seen "reduced flexibility" in its dealings with GE on behalf of clients.
The intermediary was also concerned that GE's management of the loans had shifted to Australia, which was causing service problems.
"One of the ways they will accelerate their exit [from New Zealand] is by providing poor service."
GE spokesman Tristan Everett said the finance company's loan book was in run-off mode.
"Like any organisation managing such a book, while we continue to service loans and deal with daily queries, we're no longer able to transact major structural changes or make changes that would increase the life of the loan."
He said customers should not have noticed any changes in service since the administration had moved to Sydney, as the toll-free numbers and internet facilities were the same, and the call centre was open during New Zealand business hours.
NOT INTERESTED
* Non-bank lenders are being accused of trying to encourage unwanted customers to leave.
* They are keeping interest rates high, despite significant falls in the market.
* They are refusing to make any adjustments to loans, such as top-ups or transfers of security.
Mortgage brokers and other intermediaries in the industry say it is virtually impossible to get any service on the loans or to make changes to them, and the lenders are resolutely charging interest rates way above the market average.
"In one case they said to me that 'we're keeping the interest rates high, we've got no obligation to reduce them, and we're quite happy if borrowers want to take their mortgages elsewhere'," said Peter Seers, of finance broking company Moneyscience.
"They're taking the opportunity to take some extra profit as well."
One Auckland property investing couple had seven loans on small central city apartments through trustee company Trustees Executors.
They believe the funder of the loans was fund manager Tower, which closed its $242 million Mortgage Plus fund in April.
Last year, Trustees Executors wrote to the couple saying their loans would not be rolled over because the lender no longer had funding.
The wife said they managed to refinance five of the loans. But because the apartments are smaller than 40 square metres in size - which banks are reluctant to lend on - by the end of the year lending criteria had tightened to the point where they could not find a new financier for the remaining two.
Despite the fact that bank home loan rates were now at around 6 to 7 per cent, Trustees Executors was charging a floating interest rate of 11 per cent and would not drop it, the woman said.
She said Trustee Executors had been difficult to deal with, and only a skeleton mortgage staff remained. "They just didn't want to know."
Trustees Executors did not return the Business Herald's calls.
Meanwhile, a Hamilton property investor is having to pay GE Money a $25,000 break fee on a fixed-term loan with 18 months to run, after the financier refused to transfer the security for the loan to another property.
GE announced in October that it was pulling out of the New Zealand home loan market.
The Hamilton man currently owns four houses, but is having to sell one in order to repay a debt to a friend.
He and his wife are currently renting, and were happy to buy another house to live in and transfer the loan at its current 9.45 per cent interest rate to the new property.
The man said he did this about a year ago with another non-bank lender. "We're quite prepared to put up other security and just carry on with the mortgage. But because [GE] are unwilling to it's forced us to take a $25,000 hit."
Another intermediary in the industry said he had seen "reduced flexibility" in its dealings with GE on behalf of clients.
The intermediary was also concerned that GE's management of the loans had shifted to Australia, which was causing service problems.
"One of the ways they will accelerate their exit [from New Zealand] is by providing poor service."
GE spokesman Tristan Everett said the finance company's loan book was in run-off mode.
"Like any organisation managing such a book, while we continue to service loans and deal with daily queries, we're no longer able to transact major structural changes or make changes that would increase the life of the loan."
He said customers should not have noticed any changes in service since the administration had moved to Sydney, as the toll-free numbers and internet facilities were the same, and the call centre was open during New Zealand business hours.
NOT INTERESTED
* Non-bank lenders are being accused of trying to encourage unwanted customers to leave.
* They are keeping interest rates high, despite significant falls in the market.
* They are refusing to make any adjustments to loans, such as top-ups or transfers of security.
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