Go further with Finsure
Our Infynity CRM is the latest and most advanced aggregator software in the market, utilising cutting-edge technology to enhance both the adviser and customer experience.
Intuitive user experience
Automated processes to save time
Sophisticated marketing tools
Third-party integrations
Inbuilt compliance functionality
And much more!
If you would like to discover how Finsure can help you unlock your full potential, scan the code below to book your FREE Infynity demo with our team!
TO BOOK YOUR FREE DEMO
Contents.
Following Resimac’s shock decision to shut down its New Zealand operations to new business, Jenny Ruth checks in with other non-bank lenders to see what’s happening.
Making
the Resimac
A round up of news
Michael Hewes from the FMA talks about what the regulator found from its first ever FAP review.
New appointments at Loan Market and NZFSG, Liberty, FMT and The Adviser Platform.
MARKET UPDATE
Buyers sitting on their hands in a sea of for sale-signs.
How much influence do short-term rentals really have on house-prices and rents?
NZ Home Loans chief executive reveals what clients are saying.
To AI or die; That is the question.
Partners Life presents a case study on how three experts worked together to get a great client outcome.
Former columnist, and now adviser coach, Steve Wright says it’s time to insure yourself. Not just the house.
Sally Lindsay finds out what opportunities exist
MAKING SENSE OF THE RESI SHUT DOWN
The decision to shut down Resimac’s New Zealand operations took the market by surprise.
It blindsided their hardworking New Zealand staff who had no forewarning. It stunned advisers.
And it raised the inevitable question about the future of non-banks in New Zealand.
They came in droves before the Global Financial Crisis. Then left suddenly.
Resimac New Zealand has been a success. Currently its loan book is around $620 million, but it got close to $1 billion a few years back in a different economic environment.
It had a good suite of unique products designed for different customers and borrowing scenarios.
The non-bank question
The question about the future on nonbanks is also amplified by Bluestone’s decision last year to pull back from the New Zealand market and focus on its white-label Select Home Loans, offered exclusively through NZFSG advisers. (Bluestone has form for being in and out. Before the GFC, it was a significant player: besides home loans, it had a home-equity-release product. After the GFC, it folded its cards, only to come back again some years later).
While this looks like bad news, a look across the non-bank sector shows a strong industry that has weathered the storms and continues to grow.
The likes of Avanti, FMT and Fico are examples of solid businesses. But there are many smaller players.
It’s always hard to put a number on how much home-loan lending the sector is responsible for, but here at TMM we reckon the total book size could well be around $5 billion.
On top of that there is the consumer lending and asset finance done by nonbanks.
Why, Resimac?
Coming back to Resimac New Zealand, the big question is: Why? No one will talk, and questions must be asked if there are bigger issues with ASX-listed Resimac, what with the chief executive resigning and taking gardening leave till his official last day, only days after the New Zealand announcement.
The hope is that Resimac tries to find a buyer for its New Zealand book, but it doesn’t appear – at least from our sources – that much is happening with a sale.
We are told Resimac would make more money by winding down its book as opposed to a sale. Resimac had some good products and hopefully other non-banks will get into these spaces.
What can we take out of this? Firstly, it appears more of a company-specific issue as opposed to a sector/non-bank issue.
As Basecorp chief financial officer John Moody said in a TMM Podcast, non-banks need to stay in their lane and not try to compete with the big banks. Doing the latter only has one outcome, and it’s not good.
While it is quite right people ask questions, we say the nonbank space is here to stay - and that advisers and borrowers should continue to use non-banks.
Philip Macalister Publisher
Publisher Philip Macalister
Learnings from Our Clients
BY KIP HANNA
Compared to OECD standards, financial literacy and uptake of financial advice in New Zealand is low. The challenging economic environment makes understanding clients' wants, needs, and support requirements crucial to providing meaningful advisory services.
At NZHL, our annual client surveys are purposely in-depth to give a real measure of our performance and service and a deep understanding of our clients and what they are looking for from their advisers.
The 2024 NZHL Client Survey highlighted the importance of advisers who assist their clients through their changing circumstances. Findings include:
• 40% say they are in a better financial situation than 12 months prior (unchanged from 2023).
• Optimism for the next 12 months has risen somewhat, with 13% believing they will be worse off (down from 19% in the year prior).
• Changes in financial situations were largely driven by the cost-of-living and interest rate increases, and inflation.
• Just under half (45%) made a major financial decision over the last 12 months with purchasing a new home or investment property remaining top of the list.
• Clients who paid down debt increased by 7% - overtaking those who took on more debt.
One of the most powerful insights from the survey is that New Zealanders are looking to financial advisers to support them not only with advice around lending, insurance, and wealth creation but also with more tools, support, and advice on basic budgeting and financial management.
Pleasingly, our client satisfaction is on the rise despite a higher cost of
ONE OF THE MOST POWERFUL INSIGHTS FROM THE SURVEY IS THAT NEW ZEALANDERS ARE LOOKING TO FINANCIAL ADVISERS TO SUPPORT THEM ... WITH MORE TOOLS, SUPPORT, AND ADVICE ON BASIC BUDGETING AND FINANCIAL MANAGEMENT.
living and affordability challenges due to the personalised ongoing local support offered by NZHL advisers. Our clients told us that having the ability to build an ongoing relationship with an adviser rather than dealing with ever changing bank employees or selfservice advice is key.
Client satisfaction is largely influenced by the frequency of contact and ongoing service, with those contacted at least once per year almost twice as likely to indicate a high level of satisfaction and consider NZHL for future use - those who have had a review within the last 12 months were almost another 20% more likely.
Additionally, the survey emphasised the value of a holistic approach, with clients utilising their adviser for both their home loan and insurance needs indicating a great level of client satisfaction and financial well-being.
When looking at why our clients would (or wouldn’t) recommend our services, and what they value most, our clients chose:
• Helpful and knowledgeable staff.
• Good advice and communication.
• Great customer service and experience.
• A good relationship with their adviser and personalised service.
• The ability to pay off their mortgage quicker and save money.
Our clients are placing increased value on consistency in service, trusted relationships, availability and time when needed, and personalisation. In exchange, 76% are willing to recommend their adviser to
their friends, families, and colleagues as they see a tangible benefit to the service provided.
Maintaining a regular contact programme and taking the time to listen to and have a solid understanding of clients, their priorities, sentiments, and any changes over time, allows for an enhanced service offering and client experience resulting in client loyalty and business growth, a priority for all advisers.
ABOUT NZHL GROUP
NZHL Group is a Kiwi-owned, respected, and trusted brand – a purpose-driven (financial freedom, faster) home loan and insurance network that offers a solution to support advisers and help put Kiwis in a better financial position.
Part of Kiwi Group Capital Ltd (KGC) which is 100% Government owned, NZHL Group operates with an Independent Board and local business owners nationwide.
ABOUT THE NZHL 2024 CLIENT SURVEY
About the NZHL 2024 Client Survey
The NZHL survey was run by Key Research from April 15 to May 26, 2024. Current clients and clients who left NZHL within the last two years were invited to participate. Findings were based on 4,177 responses. The data collected has an expected 95% confidence interval (margin of error) of +/- 1.48% at an aggregate level. ✚
Kip Hanna is the CEO at NZHL and has written this opinion piece based on his experience. This article is intended to be general in nature and should not replace personalised business or career advice.
Xceda steps into Resi breach
Niche lender Xceda has rolled out a 10 year property investment loan.
Resimac previously offered a specialist property investment loan which was popular with investors and advisers. Chief executive Daniel McGrath says the product was in development prior to Resimac announcing it was closing its New Zealand operations to new business.
Recently Xceda has been added to the approved lists of Kiwi Adviser Network and Link Financial Group.
McGrath expects that new regulations around deposit takers will assist companies like Xceda to grow.
From July next year a deposit guarantee scheme starts. Under the scheme deposits of up to $100,000 will be guaranteed.
Final details of the plan are yet to be released but deposit taking institutions including banks will have to pay a levy
into a fund managed by the Reserve Bank.
McGrath says Xceda is funded through term deposits and with its growth and the guarantee scheme it has “a lot more confidence around its long term funding.”
He says the company is getting a lot more interest from depositors and its book currently sits at around $125 million.
To help with its growth Xceda has appointed two business development managers. Ex-Bluestone business development manager Monique Riley has joined the firm as a senior lending manager.
The other appointment is Tracey Topp who previously was with ASB. Prior to that she had worked as a mortgage adviser mainly with Vega. The company is also offering a home equity release product and it has teamed up with Generate to offer KiwiSaver.
Lender closes down
Christchurch-based Specialised Capital Solutions has closed its doors.
In a LinkedIn post it says: "After much consideration and with a heavy heart, we must announce that Specialised Capital Solutions will be closing its doors for good."
SCS billed itself as a one-stop shop for property for property developers.
It was founded in Australia in 2019 and leveraged technology to connect commercial, development and property funding applicants with lenders.
Applicants submitted loan "scenarios" through an online portal which was then submitted to accredited lenders.
"This journey has been amazing, with lots of highs, challenges, and unforgettable moments and we are grateful to everyone who has supported Specialised Capital Solutions over the years," the post said. "However, due to an internal realignment of business focus in a different direction, sadly we must close this chapter. "
Chief executive Sacha Doyle continues to operate as an independent commercial adviser to assist with any ongoing and future transactions.
Shepherd herds new flock Bizcap opens portal
Marty Shepherd has ended a long career with Cressida Capital to take up a role as associate director at Pallas Capital.
Sydney-based Pallas is a privatelyheld property finance company, with a strong mid-market lending focus primarily for property developers and investors.
It focusses on larger property finance transactions, typically between $3 million to $20 million. In April it settled eight transactions totalling $45 million.
Pallas currently offers five primary lending products with a focus on the Auckland, Christchurch, Hamilton, Tauranga, Wellington and Queenstown property markets. Other locations are considered on a case-by-case basis. Its products include; residual development stock, investment assets, pre-development,
construction, and vacant land loans.
Shepherd said it was time to move on from Cressida. The Pallas offering is different to other non-bank lenders, he said.
Small business leader Bizcap has launched its new Partner Portal.
The portal brings advisers a suite of powerful new features.
- Bulk Lead Uploads: Save time and effort by easily uploading multiple leads at once, streamlining your workflow and increasing the speed in which deals get to our team.
- Visual Snapshots of Monthly Activity: Get a clear, visual overview of your monthly performance, making it easier to track progress and identify opportunities.
- Live Status Updates of Ongoing Deals: Stay informed in real-time with live updates on the status of your deals, ensuring you’re always in the loop.
- Easier Access to the Bizcap Lead API: Enjoy seamless integration with our updated API, providing you with even more functionality and ease of use. ✚
•
•
• Strong industry knowledge, experience and relationships developed from over 25 years in the
FMA monitoring gives FAPs eight out of 10
Think about proportionality says the FMA in the wake of its financial advice provider monitoring report.
The regulator’s monitoring team visited 60 class one and class two financial advice providers (FAPs) the length of New Zealand in preparing the report, says FMA director deposit taking, insurance and advice Michael Hewes.
Regardless of size there was a consistency across both classes of FAP in adhering to code requirements and standard conditions.
The FMA monitoring approach focuses very much on what is appropriate for the size of the business, says Hewes, but from a findings perspective, there was consistency across class ones and class twos.
“Our expectation is that if you are a larger FAP you will have the resources to undertake the oversight, supervision and monitoring of financial advisers.”
Hewes rates both classes a solid 8 to 8.5 out of 10. “It’s important to recognise the amount of work that the FMA, the industry and industry associations have undertaken over a long period of time. There weren't any surprises. We have a very active market engagement strategy even
outside monitoring.”
When it comes to professional development, Hewes says FAPs should broaden their horizons.
“Think about your business and the learning that is appropriate to you. Rather than being focused on one line like insurance, think about other inputs specifically around insurance. That might be opportunities to learn about the broader economy and what feeds into and is driving insurance premium rates.”
On the topic of suitability of advice, Hewes discusses the recent case in which the FMA censured AucklandFAP deVere for breaching its licence obligations. In the report, the FMA said deVere failed to adequately consider the client’s investing experience and their financial product knowledge.
This has led to commentary that the case takes the suitability question further than its description in Code standard three.
“It’s about having that broader horizon and lens,” says Hewes. “While you have Code standard three, it’s appreciating that in this case there needed to be that focus on client outcomes and client harm.”
So does the adviser having to go in and question and explore the client’s knowledge around products add up to something new? Not necessarily new,
says Hewes. “We are saying don’t use a templated question set or rely on a tick box exercise. It’s going one step further and finding out in more detail about their knowledge.
“One of the things we’ve always said, and you’ll hear this theme come through in a lot of the FMA communications - is about proportionality - making sure you have the processes in place that are right sized for your business. So where there’s someone using a combination of a template or tick box, what overarches and underpins it and what else is there to ensure you are delivering good outcomes?”
Does that mean proportionality is a subjective judgement of the FMA?
“Where we are visiting a class one FAP our expectation would not be a client assurance programme or framework built and designed for a large FAP class three FAP. It’s making sure what you put into your business is appropriate for your business and that has been the clear and concise message the FMA has always given.
Class three monitoring is about to start. Some of these may have multiple types of license so the FMA will go in once and look at all licenses together. ✚
TO LISTEN TO THE FULL PODCAST go to tmmonline.nz/podcast
People on the move
Loan Market builds support team
Loan Market has appointed Devaney Davis as its Aucklandbased relationship manager, with Karina Reardon stepping into the role of national support lead.
Devaney is from Loan Market Central, where she started in 2019 as a client-service manager, before becoming operations manager and then transitioning to an adviser.
Loan Market director Nicole Ferguson says Devaney will use her experience to help grow and enhance other Loan Market businesses in the Auckland region.
“She’s passionate about delivering on our promises to advisers – saving you time, keeping you safe, diversifying
NZFSG adds technology and innovation leader to its board
your revenue, helping you find and keep clients, growing your business and boosting the Loan Market brand.”
Reardon is another familiar face at
New Zealand Financial Services Group (NZFSG) has added leading technology and customer-solutions advocate Nicola Riordan to its board as its new non-executive director.
Riordan’s appointment adds to the renewal of NZFSG’s board, with Thérèse Singleton appointed to a separate non-executive board role.
Riordan has more than two decades of experience and leadership, across innovation, technology, data and
The Adviser Platform turns on the tap and adds two new staff
The Adviser Platform (TAP) has added two new team members: Taz Alnahas as Key Account Manager and Meryll Villaver as Client Engagement Manager.
The expansion comes on the heels of TAP's growth since the start of the year, driven by increasing demand from financial advisers seeking to streamline and simplify their businesses.
To meet this growing demand and ensure continued excellence in service, TAP has strengthened its team.
TAP managing director Ryan Edwards says Alnahas and Villaver join the business “at an exciting time.”
"With their expertise and passion for supporting adviser businesses, they
will play a pivotal role in ensuring we continue to deliver exceptional support and resources to our expanding member base."
Alnahas will focus on deepening relationships with existing members, providing tailored training and support to help advisers maximise the benefits of TAP's platform.
He brings extensive experience in the insurance industry to the role, having spent more than seven years at Partners Life. More recently, he did a short shift at Auto Finance Direct as brand development manager.
Villaver will be the first point of contact for new and prospective members. Her expertise in clientrelationship management will ensure
Loan Market, having earlier worked as a business development executive at NZFSG and Loan Market.
Ferguson says Reardon has helped advisers sharpen their sales, marketing and business-management skillsand more recently has led a team of advisers in Loan Market’s topperforming New Zealand office.
“With over two decades of mortgage advice and leadership experience, Karina is a well-respected and popular figure in the advice community. She has built a strong network of mortgage and insurance advisers, who frequently seek her mentorship to grow their own businesses.”
marketing, with expertise gained through global brands including Xero, Skype and TweetDeck.
She also has extensive corporategovernance experience and is currently a board member for Kordia and the Real Estate Institute of New Zealand.
NZFSG chairman Brendon Smith says Riordan’s contribution would further support the group’s commitment to providing advisers with leading technology and industry insights.
advisers receive the support and resources they need to thrive.
Not from a financial-services background, she was most recently an account manager at Cloudstaff. Before that, she was Sales Engineer Channel Sales Manager for a division of LG Electronics in the Philippines.
DEVANEY DAVIS
TAZ
ALNAHAS
Liberty adds Wellington-based BDM
Liberty has appointed Grant Parker as a business-development manager for Wellington and the midlower North Island, strengthening the non-bank’s adviser support.
Parker comes to Liberty with a background in business development and relationship management, in both the private and public sectors.
"His passion for helping others grow, and his unique skillset has helped him build a large network within the financial services industry," the company says in a statement.
"With almost 15 years in business development and relationshipmanager roles within the insurance industry, Parker brings a fresh perspective to the role at Liberty. He has a proven track record in training and development, sales, and building and nurturing successful relationships – not only in a professional sense,
but with over a decade as a basketball coach within the community."
Parker cites culture and communication as essential elements for success in any profession.
“I look forward to using my strengths in these areas to connect with advisers, better understand their business and goals, and help them grow.”
Equity release firm gets new director
Christine Brownfield has joined the board of directors of Lifetime Home Limited, a subsidiary of Retirement Income Group, which offers a debt-free way to access the value of your home for retirement income.
Brownfield has an actuarial, strategy and finance background, and was the Chief Actuary at ING Australia for five years.
For the past 13 years, she has also been involved in pricing, valuation, strategy and stakeholder engagement
for HomeSafe Solutions, the Australian leader in debt-free equityrelease solutions.
She will work alongside Ralph Stewart, the founder and managing director of Retirement Income Group, Susie Staley, the group's director, and Chelsea Devlin, the group's chief marketing officer.
Ralph Stewart says Brownfield’s expertise in home-equity release, a relatively new product in the New Zealand market, is a great asset for Lifetime Home.
First Mortgage Trust creates another new role
First Mortgage Trust (FMT) has appointed Charlie Oscroft as Investment Relationship Manager.
Oscroft spent 24 years at Colliers International, with the past two as an investment adviser at Taurangabased Mackersy Property.
He brings experience in investment management and capital raising across real estate markets in both New Zealand and overseas.
FMT chief executive Paul Bendall says the latest new role, recently created, demonstrates growth and strategic vision.
“In spite of a challenging economic environment, FMT is performing well and continues to grow.
“We’ve just hit $1.7 billion in funds under management and we’re launching our new wholesale fund, which allows us to meet the growing needs of our borrowers and creates a more diverse and funding pool for all our investors.”
Hurt to come from DTIs
Property accountant Matthew Gilligan says while the DTI ratios appear to be roughly similar to the amount of servicing required under current bank testing, the hurt will come from the restricted bank discretion – limiting how many people are allowed to ‘push the envelope’ and exceed the ratio.
In particular, he says, DTIs will make it much harder than it already is for first-home buyers and investors to get started.
“At present the banks can look at the character of someone and give them the
benefit of the doubt,” says Gilligan.
“For example, a young professional with a good job, a double-income household and no kids, is a good bet for a banker to back over time. But now this discretion, and ability to help such people, is being interfered with; only 20% of lending can exceed the ratio, and in practice the banks will seek to stay well under that.
“The main banks have proven to be responsible in their lending practices; why do we need to shut down their discretion, which helps younger people get going?”
Gilligan says many new homeowners and investors have to push their limits: DTIs will curtail them, unless they are buying new builds (which are exempt).
In the long run, under DTIs, capital growth will be moderated by the link
between income and the ability to borrow, he says.
“Incomes will lag capital growth during boom times, so DTIs will inhibit bubbles from forming. And house-price growth will become linked to long-term income growth, which is sobering for investors and homeowners.”
He says while socially this may well be quite progressive, it will take the shine off growth and potentially cause reduced investment into the sector over the longer term.
“There won’t be a crash due to DTIs, because the exemptions are well thought through, but there must be reduced housing activity, and significant pain for people with stretched servicing.”
Short-term rentals have little influence on rents and house prices
New analysis by Infometrics has found that the shortterm rental accommodation (STRA) sector has a limited effect on rental prices - and no significant effect on house prices.
Population and interest rates are having the greatest influence on accommodation costs, Infometric’s independent expert study says.
Commissioned by Airbnb, the study identified a range of factors that could impact rental prices and house prices, including population growth, interest rates, incomes and STRA numbers (sourced from AirDNA).
Infometrics chief executive Brad Olsen says analysis of these factors shows short-term rental accommodation has only a limited influence on rental prices in the areas
looked at in the study.
“When we looked across the range of possible factors that could influence rental prices, STRA only had a limited influence on rents and no real influence on house prices, providing some important evidence to add to the debate about housing, rents, and the STRA sector.
“The housing market fundamentally suffers from a lack of supply, which has caused house prices and rents to rise over time,” Olsen says.
Focusing on the Auckland, Wellington city, Queenstown-Lakes District and Christchurch city territorial authorities, an econometric analysis found the main drivers of rental and house price increases are population growth and interest rates.
“For example, our analysis for Queenstown-Lakes District found that STRA contributes negligibly to monthly rental-price increases, with the average
amount being an additional 35c/ month. Over the period January 2018 to September 2023, population growth influenced around a $101-per-week increase in weekly rent, while STRA only influenced $11 per week.
“Although people often focus on STRA as a key reason for higher rents and housing costs in some areas, this analysis clearly finds other factors have a much greater influence.”
There has been an historic shortage of new properties, coupled with record migration, low borrowing costs, and high construction costs, Olsen says.
The analysis also found that before the pandemic, the combination of strong population growth, low mortgage interest rates, and insufficient supply of new housing, resulted in house-price inflation peaking at 15% a year in the June 2016 quarter, compared with a 1.9% a year increase in household incomes.
Property millionaire maker machine
Over the past decade, the Kiwi property market has minted many millionaires.
From 2013 to 2023, New Zealand appears in the top-10 fastest-growing millionaire populations in the world.
The country’s millionaire population grew 48% - ahead of Switzerland and Australia at 38% and 35%.
Most New Zealanders hold their wealth in property. Almost 60% of all household assets were in housing and land in March 2021 (before the peak of the housing market), says Simon Angelo, Wealth Morning chief executive and publisher.
Since the early 2000s, housing has risen to become almost five times the value of the country’s GDP. By way of comparison, in the US, that multiple is
only around 1.9 times.
Americans have grown much more wealth in equities. About 30% of Americans own a stock portfolio worth more than US$500,000. This wealth increase has come even as interest rates rise.
Over the past five years – May 2019 to May 2024 – New Zealand home prices have far lagged the S&P 500, which was up more than 80%.
On average, Kiwi properties have increased 5.5%. This includes peak-totrough drawdowns in 2023 of 19% in Auckland and 25% in Wellington.
Residential property has delivered much better over a 10-year period, Angelo says. Over that time frame, prices have about doubled.
However, New Zealand home prices (by multiple of median household
income) are still among the most expensive in the world. Auckland homes still sold for 8.2 times the median income last year, when affordability is generally considered to be around three times income.
This has led to the Government demanding councils live zone enough land for 30 years of housing growth and ditch urban rural boundaries after research showing that urban growth boundaries alone add a staggering $600,000 to the cost of land for houses on Auckland’s edges.
The Government says ensuring abundant developable land within and around cities, will prevent the artificial scarcity that drives up prices. This is in contrast to housing affordability policies that are limited to densification strategies. ✚
individual people
finances
Buyers sitting on their hands in a sea of for-sale signs
Thanks to soaring listings and sluggish sales, there are more homes on the market than at any other time in the last decade
BY SALLY LINDSAY
Alarge overhang of unsold properties is casting a huge shadow over the property market, with the amount of stock available at a 10-year high.
While listings soared, sales slumped to the lowest for a June month since the Global Financial Crisis in 2008, and prices flattened.
Many house-hunters are in hibernation until conditions improve, potentially on the other side of winter, maybe even longer, says QV.
CoreLogic figures measured across agent-led and private-sale transactions show there were just 4,744 deals done in June: that’s 22.1% down from the same time last year, and breaks the consecutive run of growth since April 2023 (-9.6%).
In contrast, the total stock on the market is more than 20% above the same time last year, leading to a market that is firmly in buyers' favour, with more people wanting to sell properties than there are people who are willing and able to buy them.
Buyers cautious
Kelvin Davidson, CoreLogic’s chief property economist says the sluggishness of sales is driven by cautious or restrained buyer demand, not a lack of choice.
“It would appear that some pent-up reluctance by sellers to list in the final few months of last year is now coming forward and turning into available stock this year. That’s creating more choice for buyers and feeding into
weaker price pressures.”
The glut of properties on the market also comes as regulatory changes at the beginning of July are bound to have an impact: new debt-to-income ratios (DTIs), loosened loan-to-value ratios (LVRs) and the Brightline Test falling back to two years. Earlier in the year, interest deductibility was also reinstated.
Total stock is up in all regions, increasing nationally by 28.6% yearon-year in June, while prices fall, according to figures from property website realestate.co.nz.
Although stock was down by 2.6% compared to May, the total number of homes has remained above 30,000 for five consecutive months.
New listings also rose by 25.5% yearon-year during June. However, this is a return to normal after low listing levels in 2023.
Big supply of rentals
Realestate.co.nz chief executive Sarah Wood says the new regulations, together with existing market conditions, should make buying an investment property attractive, but with a big supply of rentals available, new investment buyers will need to understand rental demand in their area.
She says those investors choosing to sell also need to price realistically. Some may struggle to get their desired price, especially if they bought at the peak of the market and potentially face selling for less than they purchased.
“For first-home buyers, understanding
their local market will be more important than ever, now that DTI ratios will cap how much a buyer can spend, at six times their income.”
REINZ data also show listings have risen dramatically, while property prices crashed in June.
Nationally, listings increased by 25.5% year-on-year from 6,218 to 7,805.
The number of properties newly listed for sale was almost 80% higher than the number sold in June.
Twelve of the 15 regions REINZ monitors had a rise in new listings year-on-year, with significant increases in Wellington, up a staggering 50.3%; Hawke’s Bay, up 35.6%; Gisborne, up 34.8%; Bay of Plenty and Canterbury up 33.6%; Auckland, up 33%; and Otago, up 23.4%.
Only two regions had a drop in new listings: Northland, down 26% for the year, and Marlborough, down 11.8%.
At the end of June, the national inventory level had risen 28.6% from 24,676 to 31,745 year-on-year, and dropped 2.6% to 32,598 month-onmonth.
REINZ chief executive Jen Baird says the increasing number of listings continues the trend seen all year due to high interest rates, cost of living pressures and changing employment circumstances.
Massive slump in sales
While listings soared, sales collapsed in June, dropping by 25.6% year-on-
year, from 5,854 to 4,356 and down a third on May, REINZ figures show.
The drop in sales was across the entire country - with the exception of Northland, which was up by 11.9%.
The biggest falls were on the West Coast, down 51.2%, Tasman, down 41.7%, Gisborne, down 39.4% and Auckland, down 35.1%.
Baird says there was a notable drop in buyer activity in June, and a reduced sense of urgency.
“As more listings come to a wellstocked market, those who are in the position to buy are taking their time to carefully select their ideal home,” she says.
Davidson says even the reduced pool of buyers who have the finance, and who can afford 7% mortgage rates, are seemingly being selective on finding the right property.
However, first-home buyers (FHBs) show no signs of pulling back, with their activity continuing to hover at recordhighs, especially in Auckland (27%) and Christchurch (29%).
First-home buyers just keep rolling on, with their market share holding firm nationally at 26%, Davidson says.
“It’s never easy to buy that first home, but, at the moment, that group is enjoying lower house prices than at the
peak, less competition from other buyer groups, as well as other supports such as access to KiwiSaver for the deposit.”
He says it will be interesting to see whether the recent loosening in loanto-value ratio rules adds an extra boost to FHB activity, given those buyers are already making full use of the banks’ low-deposit lending allowances.
House prices stay flat
Frosty economic conditions are causing home values to dip with the temperature in most main centres.
QV’S House Price Index shows the average home value now sitting at $916,285. That figure is still 2.8% higher than last year and 13.9% ($147,480) lower than the market’s peak in late 2021.
Data from REINZ shows the national median price declined by 1.3% year-onyear, from $780,000 to $770,000.
Taranaki and Gisborne stood out, with Taranaki’s median price increasing by 10.7% year-on-year, from $570,000 to $631,000 and Gisborne up by 7%, from $575,000 to $615,000.
QV operations manager James Wilson says downward price pressure has spread across all segments of the market, with investors, owner occupiers
and even first-home buyers – still the most active group in the market today –all taking a noticeable step back.
“There are some pockets of modest growth, most notably in the South Island. However, that also appears to be waning now, with even Christchurch and Queenstown – two of our more ‘bullish’ housing markets in recent years – now experiencing little or no growth whatsoever,” he says.
“Tough economic conditions are continuing to make it extremely difficult for potential buyers to save a sizeable deposit for a home, secure finance from the bank and service a mortgage.”
Wilson says sellers are having to be increasingly patient. “Many residentialproperty sales are now conditional on other sales occurring. This has been causing chain reactions in many instances, which is often extending sales periods or causing deals to fall over altogether.”
He expects home values to soften further throughout winter.
“There’s nothing to suggest house prices will take off again in the near future, while there’s everything to suggest that they will remain flat to gently falling.” ✚
While Resimac has called it quits in New Zealand and the country's economic environment is clearly at a low ebb, other nonbank institutions see that decision as peculiar to Resimac and not indicative of any imminent demise of the sector.
The departure of Resimac's chief executive Scott McWilliam announced on July 9 after 15 years with the company, including six years as sole chief executive executive and three years before that as joint chief executive does suggest problems internal to Resimac.
Non-bank lending sector reviewed
Jenny Ruth looks into the state of the non-bank a sector following Resimac’s surprise departure from New Zealand.
BY JENNY RUTH
Still, although Resimac's decision to stop writing loans in New Zealand did take the market by surprise, its ASX-listed Australian parent's results showed it lost A$2.2 million before tax in New Zealand in the six months ended December, down from a profit of A$1.5 million in the previous first half and despite revenue rising 21.3% to $28.3 million.
The local arm also lost A$2.3 million in the year ended June last year and its loan book had fallen to A$686.2 million at December 31, 2023 from A$839.7 million six months earlier at June 30, 2023. The loan book appears to have
peaked at A$953.34 million at Dec 31, 2022
By contrast, the Australian business reported a pre-tax profit of A$31.7 million, although that was down 41.8% on the same six months a year earlier, while the Australian loan book stood at A$13.94 billion, down from A$14.09 billion at June 30 last year.
Writing on his website, Opes Partners' Peter Norris offered some clue as to what went wrong for Resimac in New Zealand.
“They were about as close to a bank as a non-bank lender can be. If you can get a 6.80% interest rate from a main bank,
Resimac might charge 7.50%,” or 70 basis points more, Norris wrote.
“Now that Resimac is out, the next lowest non-bank interest rate is 8.50%.”
So, it does look like Resimac was trying to compete head on with the major banks and its losses in this market suggest that its pricing was unsustainably low.
Knock on effects from Resimac shutdown
Squirrel Mortgages is one organisation impacted to some degree because its Launchpad offering had been financed by Resimac.
With Launchpad, those with as little
‘[Resimac] were about as close to a bank as a non-bank lender can be’
Peter Norris, Opes Partners
as a 5% deposit can use Squirrel to bump their deposit up to 20% so they could qualify for a mortgage.
Squirrel chief executive David Cunningham says the existing loans financed by Resimac will continue but they are generally refinanced with a bank once the borrower has sufficient equity.
“Obviously, they will honour the existing agreements so there's no issue for existing clients,” Cunningham says.
Most of the business done with Launchpad has been with those with at least 10% deposits and “generally they're high income borrowers so servicing isn't the issue,” he says.
In future, Squirrel will use its peerto-peer platform to cater to such clients.
They come and they go
Cunningham points out that Australian non-banks have dipped in and out of the New Zealand market, which is very much smaller than their home market, when conditions favour them.
“My gut feel is that New Zealand organisations, such as Avanti and Basecorp will be here forever.”
And they usually come into the New Zealand market to fill a gap that the major banks have chosen not to fund.
“Most of these lenders are financed by securitisation and you need certain
‘My gut feel is that New Zealand organisations, such as Avanti and Basecorp will be here forever.’
David Cunningham, Squirrel
margins to make it work. When you have a credit crisis like the GFC, funding goes 200 [basis points] over and your whole business is screwed.”
Unlike securitisation, which is funded by wholesale investors, Squirrel's peer-to-peer business, which is worth about $250 million now, aims to attract retail investors – “most of us working at Squirrel have a retail background – it's a different model that's more sustainable through the cycle,”
Cunningham says.
“It's a long, slow process because you're building trust, but it's a sustainable rate. Any business that grows rapidly is likely to fail rapidly as well.”
Cunningham says he can't foresee a situation in which Squirrel would become a deposit-taking institution and he says the concept of the planned deposit guarantee scheme which is due to kick in from July 1 next year is “fundamentally flawed” because it is mis-pricing risk.
Basecorp isn't a deposit taker either. Chief financial officer John Moody says his firm uses a combination of wholesale funding via commercial banks, securitisation and private funding.
“Our view is that the wholesale model has served non-banks will in New Zealand,” Moody says.
Basecorp focuses on “second-chance”
DAVID CUNNINGHAM
business which offers those with a poor credit history can rebuild their creditworthiness, bridging finance and financing the self-employed or those whose income is difficult to verify.
Most of the time the banks eschew such lending because it's too complicated, although Moody says they've become more aggressive recently.
Possibly, that reflects current high interest rates that have greatly diminished appetite for borrowing.
But Basecorp is seeing “a small recovery in volumes” currently. “We're pretty confident that the bottom is in and volumes should pick up materially,” he says.
“We want to position ourselves to meet demand and to ensure we have capital to fund it and to be a strong player in that recovery.”
Moody is expecting to see more private credit in the New Zealand market.
“That's certainly a feature overseas and we're starting to see it coming into New Zealand, particularly in development finance.”
Like Basecorp. most of the non-bank financial institutions operating in New Zealand don't even try to compete with the major banks but operate in niche areas – indeed,
Heartland Bank also avoids direct competition with the major banks, even though it's considerably larger than the non-bank financial institutions.
‘We want to position ourselves to meet demand and to ensure we have capital to fund it and to be a strong player in that recovery’
John Moody, Basecorp Finance
For example, First Mortgage Trust chief executive Paul Bendall says his company will lend anything propertyrelated “so long as it's not CCCFA,” or subject to the Credit Contracts and Consumer Finance Act.
In other words, FMT avoids lending on owner-occupied residential mortgages.
It also mostly avoids lending on rural land, although it will consider lifestyle blocks.
The mainstay of its business is lending to property investors or small business owners and the self-employed and it finances a small amount of property development, although it won't lend more than a 47% loan-tovaluation ratio.
Because FMT operates a managed investment scheme, it isn't classed as a deposit taker and so isn't regulated by the Reserve Bank and it won't be affected by the Deposit Takers Act and its associated deposit insurance scheme which it comes into effect in July next year
Nevertheless, Bendall says FMT does use the one-year bank deposit rate as its benchmark and that it aims to outperform by at least 100 basis points.
In the June quarter, it delivered pre-tax annualised returns of 7.43%, the highest since the December 2008 quarter.
ANZ Bank NZ is currently offering 5.70% on a one-year term deposit while Westpac is offering 5.50%, BNZ 5.80%
and ASB 5.60%.
“For us, it's all about the premium we can produce,” Bendall says.
Nevertheless, Bendall says RBNZ has started to take an interest in FMT and that it's been reporting data quarterly to the central bank for about the last year.
FMT's fund is currently $1.7 billion and its loan book is $1.5 billion.
Bendall says he was surprised by Resimac's withdrawal from NZ.
“I think it's something peculiar to Resimac. We're still seeing good opportunities and we have a strong pipeline,” he says.
We don’t want to be called non-banks
But like others in the sector, Bendall doesn't like the term “non-bank.” “We think it devalues what we do.”
That attitude resonates with Gold Band Finance chief executive Martin Brennan.
“If I'm subject to the same rules as banks within the same bucket (it is regarded as a category three institution along with two of the smaller banks), how come they get to call themselves a bank and I don't,” Brennan says.
He agrees that with legislation covering all institutions that take deposits from the public, the definition of what constitutes a bank is becoming blurred.
Brennan is particularly exercised by Gold Band's lack of access to RBNZ's
JOHN MOODY
Exchange Settlement Account System (ESAS).
The major banks can park any excess funds with ESAS and are paid overnight interest at whatever the official cash rate (OCR) is, currently 5.5%.
But finance companies such as Gold Band are forced to use bank accounts that pay significantly less than the OCR – ANZ and BNZ currently pay 2.75% on a business premium call account while ASB offers 2.7% and Westpac is offering 2.3%.
Brennan isn't sure whether Gold Bank being included in the deposit guarantee scheme, which will guarantee deposits up to $100,000 per institution, will help or hurt his company and says he will need to see the fine print on how it will work.
But he doesn't think comparing it to the temporary scheme the government instituted in 2008 as the GFC was unfolding is a fair comparison.
That scheme was instituted in a tearing hurry and was in reaction to Australia introducing a similar scheme.
Finance companies, notably South Canterbury Finance, admitted to that scheme experienced a flood of new deposits but lacked sufficient sound lending propositions to put that money to work.
It is reasonable to assume that depositors, knowing their money is guaranteed, will tend to gravitate to institutions paying the highest interest rates.
“It's not apples with apples. The sector
is a lot more regulated than it was preGFC,” Brennan says.
It was only after many finance companies had already collapsed that the Reserve Bank was charged with regulating non-bank deposit takers (NBDTs) and the rules, including prudential and liquidity requirements, have been progressively tightened.
Brennan struggles with the fact that the NBDT category covers such a wide range of quite different institutions from not-for-profit credit unions and building societies to those still called finance companies.
Unlike banks, which must be accredited by RBNZ before they can call themselves a bank, “anyone can call themselves a finance company,” he says.
“The challenge I have talking to investors is that they can't differentiate” between the different types of companies.
While any institution covered by the deposit guarantee scheme will present “a moral hazard” in that their depositors will be covered regardless of risk, “I would suggest there are going to be sufficient mitigations in place.”
But it still isn't clear what levies the different institutions will have to pay into the scheme – it's planned to be financed over a 20-year period by levies on each institution and RBNZ has proposed the amount of the levies be determined by factors such as degrees of risk.
“If that brings our costs down, it will enable us to move into markets
we've previously haven’t been able to compete in.”
Until the Deposit Takers Act has been fully implemented, finance companies that do take deposits still have to have a trustee, so the levies they are charged will only temporarily be an added expense.
Massey University banking professor David Tripe, who is also a Gold Band director, says there are far fewer nonbank participants than pre-GFC but that there is definitely a need for them.
“There's a variety of things the banks aren't doing such as bridging finance –it doesn't look very tidy for banks – and there are a lot of transactions that don't match bank criteria,” Tripe says.
“People who can get finance through banks probably will but the banks have got so lazy about anything nonstandard.” The banks are also lacking the expertise required to write nonstandard business.
Tripe cited his knowledge of a $3 million deal that BNZ's parent, National Australia Bank which was “too hard for NAB to understand. They ended up going to Macquarie which saw it was a bankable transaction.”
He says that's why mortgage advisers are originating more and more mortgages because origination has become “a bit hard” for banks to do themselves.
“As long as banks become more and more focused on doing the plainest vanilla lending only, there will be a future for the [non-bank] sector.” ✚
‘I think it's something peculiar to Resimac. We're still seeing good opportunities and we have a strong pipeline’
Paul Bendall, FMT PAUL BENDALL
Property investment on the cusp of recovery
Property investors are jumping off the fence following big changes in the housing market, boosting business for mortgage advisers
BY SALLY LINDSAY
On the first day of July, the Brightline test was scaled back from 10 years to two, the loan-to-value ratio (LVR) was loosened, and the debt-to-income ratio (DTI) caps came into force.
Prior to that, tax deductibility was reintroduced on residential investment property.
But that isn’t all. A raft of other changes have been signalled by the National-led coalition Government, in a bid to make house prices more affordable: Granny flats of up to 60m2 will be able to be built on urban and rural sites without consent; councils will be forced to live-zone 30 years of land for housing; urban-rural boundaries will be scrapped, along with minimum apartment and balcony sizes; transport corridors will be identified for intensification; and mixed-use zoning will be required.
The biggest deal for property investors is the change in LVRs and the Brightline Test.
Banks can do 5% of investor lending at 30%, previously 35% - and, after two years of owning a property, investors are exempt from capital gains tax if they sell.
Even for an investor with, say, 33% equity, who suddenly finds themselves now able to satisfy the LVR rules, there is still the issue of high mortgage rates and relatively low rental yields.
Auckland-based Kris Pedersen, managing director of Kris Pedersen Mortgages, says of more concern to investors is loan affordability, servicing and equity issues.
“I am not running into too many people with equity issues, so will loosened LVR rules help? Yes. Will they be a game changer? No.”
While DTIs will play a significant role
in the longer term, tying house prices more closely to incomes and slowing down the rate at which investors can build a portfolio, right now they will do little, because high mortgage rates are already limiting how much debt people can secure.
Behind the scenes, banks have been using DTIs in their lending calculations for some time.
New-build properties are exempt from both the LVR and DTI regimes, as are non-bank lenders.
Enquiry surge
The changes have not resulted in an immediate flood of investor buying or selling, as predicted by some market commentators, but Pedersen, in Auckland, and NZ Mortgages owner and head of lending Nathan Miglani, in Christchurch, have both seen a surge in inquiry.
Pedersen says a lot of people are feeling mortgage pain, which means there are quite a few properties potentially being sold at discounts, but it’s hard to tell whether the wave of new listings across the country is from investors having to sell because of cashflow problems, or baby boomers cashing up for retirement.
Problems for investors arose after the previous Labour Government’s anti-investor rhetoric and changing of the tax rules, which, combined with a higher interest-rate market, drove them out of the market. Investors sat on the fence for about three years until July’s transformations.
But they kept talking with mortgage advisers because of the need to manage mortgage-interest-rate fixing, in an environment where the underlying expectation is that the next sizeable
change will be downward.
Many economists believe that could be by November. Financial markets have fully priced in a Reserve Bank cut to the OCR in November, and a 50/50 chance it could be in October.
Pedersen says even though the property market seems to be quiet, he has noticed investors are back in full swing.
“That doesn't actually mean they're all transacting. A lot want to get preapproved for mortgages, as they realise interest rates have peaked.
“And while the economy is not in good shape, the general perception is that house prices have probably bottomed out.”
Crash in June
However, there could still be further price drops, after the housing market crashed to 2008 Global Financial Crisis (GFC) levels in June, according to REINZ data.
Just 4,356 houses were sold in June, down 25.6% compared to June last year and exactly a third lower compared to May this year.
At the same time, listings have soared. Some 7,805 properties were newly listed for sale in June, up 25.5% compared to a year ago.
The new June listings were almost 80% higher than the number sold in the same month.
This is causing a huge overhang of unsold properties sitting on the market.
New investors
While only 5% of Nathan Miglani’s NZ Mortgages business comes through writing mortgages for investment properties, the sudden lurch in the
‘While the economy is not in good shape, the general perception is that house prices have probably bottomed out’
Kris Pedersen
market hasn’t stopped first-time investors knocking on his door. He says the game changer for the market is the Brightline Test being pulled back to the original two years –the time-period which was introduced by a previous National Government but ramped up under Labour’s six years in office.
“New investors wanted to come to the market before the July 1 changes, but they couldn't be bothered with the 10year Brightline test and negative media. Now we are seeing a huge number of existing clients looking to invest for the first time, mainly in existing property.”
Miglani says new builds are not on their radar. First-time investors are targeting three-bedroom, standalone homes on established sites in good school zones, selling for up to $750,000.
“Although rents may only be in the $650-a-week range, and the mortgage needs to be topped up by about $300 a week, they are happy to do this, because the mortgage on their primary home is low, they have a good income, and their aim is to hold the investment property long-term, in the belief values will jump up next year,” Miglani says.
Historically, investors have made up 30-40% of Wellington-based Velocity Finance’s mortgage business, but this has dropped away to 10-20%.
Velocity Finance director and financial adviser Brendon Ojala says those investors have been buying properties through investment companies selling new rental stock.
“They are the only real investors we have been working with over the past couple of years.”
Ojala says the buying figures on existing properties haven’t worked for investors for several years, but
he expects that to change with the Brightline Test being pulled back, interest deductibility back to 100% next year, and interest rates possibly dropping by the end of the year, leading to a confidence boost in the economy.
“Investors are also still looking for lower house prices.”
Putting the brakes on
Christchurch-based Brenda Murney, of Vega, says servicing mortgages is going to stop investors from flooding the market for some time, despite the changes.
“Until earlier this year, it just didn't make a good business sense for an investor to borrow money to buy an existing property, because they couldn’t claim the loan as a tax deduction,” she says.
“This year we've seen investors back buying both new and existing properties, but not going crazy.
“While mortgage rates are in the 7% range, this more than anything is putting the brakes on investors, because servicing costs are high. Many are having to top up repayments, as rents just don’t come anywhere near close to covering the outlay for mortgage, rates and insurance.”
Murney says tax deductibility back at 100% next year will help a lot of investors - who might have been looking at selling - ride through the economic storm until interest rates come down.
Demand for mortgages
Last year was the quietest Pedersen’s business has had in the investment market since the GFC.
“Nobody knew how high interest
rates would go, and if there would be a change in Government. That held things back,” he says.
Now, his advisers are running to keep up with investor demand for mortgages from banks and non-banks.
“Last year there was little appetite for non-bank mortgages. Now we are seeing investors saying, ‘Okay, if I can’t get bank finance for this property, which is a great buy at under-market value, I’ll be happy to get funding through a non-bank, in the hope I’ll be able to refinance back to a bank in six, 12 or 24 months.’”
As soon as the market gets the first sign interest rates are going to drop, Pedersen and Miglani expect investors to start competing seriously with other buyers.
Pedersen says he is seeing a bit of a Mexican stand-off between vendors and buyers.
“Over the next six months, some of those vendors are going to have to drop their prices, because they’ve just got to get out of the market because of cashflow issues.”
July, August and September will be a busy quarter for investors, says Miglani, but the real activity will kick into gear from February next year.
He is basing this on the number of calls from existing clients who were waiting for 2 July so they could make offers on investment properties - and the increasing number of inquiries for second-property mortgages.
New options
One of the popular and unique loan options for property investors was a product from Resimac – one that’s no longer available following the decision to close the business in New Zealand.
KRIS PEDERSON
However, Xceda has just launched a 10-year, property-investment loan, similar to what Resimac offered.
Chief executive Daniel McGrath says the product was in development before Resimac made its announcement.
He, like others, says there has been renewed interest from investors.
“It’s not happening overnight, but certainly we are seeing enquiries on the up.”
The new product allows purchasers to receive the initial two years of the facility interest-free, then amortise the balance of the loan up to year 10, over a 25-year profile.
“We are already seeing really good interest in this product. With investors, they want speed and certainty – which doesn’t always occur with the main banks. This is particularly where there are still good deals in the market if they can pounce on them quickly.”
Xceda’s ability to offer a longer-terminvestor mortgage product comes on the back of its increasing deposit book: Xceda is an RBNZ-licensed deposit taker.
“With the deposit compensation scheme due to start in July 2025, many depositors are looking to smaller
We are seeing a huge number of existing clients looking to invest for the first time, mainly in existing property’
Nathan Miglani
prudential institutions such as Xceda to take the benefits of the proposed $100,000 protection under the scheme. This is only available to RBNZ-licensed banks and deposit takers.”
Fear & greed
Pedersen says one hiccup on the horizon next year could be fear and greed returning to the market, as more buyers on the ground will push prices up.
“Some people will stick to their buying rules and other people will break their borrowing rules, and prices will be pushed up as investors acquire more property.”
Even if the market improves, Pedersen says quite a few people connected to the industry will fall over – builders, tradies and real-estate
agents getting out of the game, and mortgage advisers leaving because they’re running out of money –although there will be more activity and a little bit of capital growth.
The latest Reserve Bank figures for May show banks made $6.9 billion in new residential mortgage lending, the most in two years.
Lending to investors was a lowly $1.3 million, compared to $4 billion lent to owner-occupiers moving house, but this is expected to rise to new levels in the next six to 12 months.
Putting it bluntly, this will mean a better time for mortgage businesses to make money, Pedersen says.
Ojala agrees, saying increased activity means more profitability.
“It isn’t whether house prices are high or low, it’s the turnover of transactions that is key.” ✚
Add another string to your bow.
› Need to purchase new wheels, fund
consolidate
› Want to restructure
and
or consumer lending for home lending purposes.
› Are
› And more…
Taking care of the detail: A simple introduction from you, and our team of 20+ financial advisers take it from there.
Keeping you informed: The better finance™ Adviser Portal delivers real-time access to track loan progress, check settlements, commissions and more.
Offering strong commercial terms: Give the
The Queen of Straight-up Advice
Sarah Curtis is known for telling it like it is, whether turning away people she doesn’t think will be long-term clients, or informing the Commerce Commission – very publicly - that they’re just plain wrong.
BY SALLY LINDSAY
Setting up a new business when pregnant is a tall order for anyone.
For Kerikeri-based Sarah Curtis, of Sarah Curtis Mortgages & Insurance, it was a fraught time: used to operating at full speed, she continued at the same pace.
In a wide-ranging chat with TMM, she talks about the mortgage market; why she called out the Commerce Commission; and what she wishes she’d done differently when she’d just given birth - to both a business and a baby.
How did you get started in your own business?
Seven years ago, my husband and I decided we were going to move back home to Kerikeri. I had a two-anda-half-year-old and we wanted to be closer to family, so I transferred back with the bank.
I lasted about six weeks before
deciding to go out on my own.
I knew that being an adviser was something I wanted to do, and I saw that some of the people coming into the bank weren't getting the level of support that they needed.
So I quit - and then found out two weeks later that I was pregnant. It was hard, but in retrospect it was good.
Is there anything you would do differently if you were starting out again?
Take maternity leave.
At the time I was in the mindset of really needing to get out there and build a business. I’d be breastfeeding while talking on the phone to clients; I used to do late-night zoom calls once the baby had gone to sleep; and I took him to daytime meetings with realestate agents.
If I was starting again, I would not do any of that. I'd just sit at home with the baby. Because, as it turned out, business came in the door naturally.
Is it difficult to make your business profitable in the provinces?
I wouldn't say it's difficult; it’s the approach you take.
The trust level in the provinces is really high. There's not the same level of competition as in the cities, so if you have a good brand, and you do the right thing, people will trust you.
They see you in the supermarket and at the school, and they know you're good. We get a lot of word-of-mouth referrals.
People want to sit down and have a face-to-face conversation, so we’ve set up an office in town where clients can
‘We do turn people away, as we have quite clear expectations of what we want’
come and sit on the couch with us, eat a chocolate bar and have a discussion. There’s not as much formality in the provinces.
We do turn people away, as we have quite clear expectations of what we want – and it’s important the people we want to be working with want to work with us long term. We don’t want clients to just tap in for a mortgage and then we never see them again.
The client-relationship side of our business is important. If there’s loyalty, you go on a financial journey with them over years.
What advice would you give to somebody just starting out as a mortgage adviser?
Ten years ago you could jump in, hit the ground running and be cranking deals. It's not like that anymore. You need to have some strong relationships with lenders, with some clients or potential clients, and you need to do the hard yards to build a solid, trustworthy brand.
And all those things take time. Only do it if you really love what you do.
As a mortgage adviser in the provinces, it can feel a bit isolating, so whenever I travel I catch up with other advisers in other areas, such as Christchurch and Tauranga, to have a coffee and discuss the industry.
They’re good connections – and that’s what helps you get through the rest of the year.
How would you characterise the mortgage market?
We work in the first-home-buyer segment and we’re finding our clients are having a lot more success than they might have previously, because vendors are more open to negotiation.
We haven't necessarily seen a big reduction in house prices, but, rather than properties going to auction, there's more capacity for first-time buyers to be able to put
forward an offer - with a longer finance date so they can do their due diligence, get a builder’s report, and to do those things once they know that they'll actually be able to buy the property.
We work with our clients from an early stage – often two to three months before they are even looking to do anything – so we are confident when they’re putting in offers that they’ll be able to get finance.
What would you like to see change in the mortgage market space?
Banks making it easier for existing clients to be able to get mortgage topups.
We struggle with the time that goes into getting, say, a $20,000 top-up for a client to do some renovations.
It takes the same amount of time to do that as it does to do a full mortgage application for someone buying a brand new house. There’s no sale and purchase agreement, but a lot of time is taken up explaining the value of the property.
All the policies that used to be around existing lending - with banks easily able to see income going into the bank and clients under no pressure with repayments - got pulled away with the CCCFA and have not been re-established, even though the Government has scrapped the prescriptive lending rules.
What is the one thing you do consistently every day in your business?
Right from the start, I’ve been active on social media. I try to post every day, as it helps enormously with business.
The other thing I do every day is check in with my business partner, Gareth O’Brien. I do the face-to-face business with clients and he does everything else.
We catch up every day to see where our deals are, run through our CRM
Sarah Curtis
From
I grew up in West Auckland until I was 16, then the family moved to Kerikeri. At 21, I moved to Auckland to follow a boyfriend, who is now my husband.
Family
I am married to Shaun, who is an investment adviser for Craigs Investment Partners, and we have two children aged 10 and six. My parents are a huge part of family life, picking up the kids every day after school so I can run my business.
Outside Work
I chair the local business association and the school PTA, and then I watch TV and read.
TV show
Survivor and Trust on Netflix. Any reality television.
Favourite book
I had a mission to read 24 books in 2024 and I've read 30 so far. My favourite is Tomorrow, Tomorrow and Tomorrow by Gabrielle Zevin. Motto Que sera sera.
How has business been for you this year in the light of the raft of changes?
Both Gareth and I come from a banking background, so we're au fait with constant change.
We try and stay on top of everything that's happening in the market, from government regulatory changes to societal shifts – and we’ve worked really hard to consistently engage with the market and with our existing clients.
It feels sometimes like we're trudging through mud. Sometimes we'll get out of the mud for a bit, but then something else will change.
You describe your business as giving “straight-up advice”. How did that come about?
A few years ago, I had a client who commented on one of my Facebook posts that I was the “queen of straightup advice.” I was like, “Oh, I quite like that.”
I'm very upfront. Very to the point. People are able to be, “Okay, cool, she'll tell me the way it is.”
It seems to attract the type of people that we want to work with.
When the Commerce Commission made pointed comments about mortgage advisers and banks, why did you speak up?
I spend all day telling my kids to do the right thing and to stand up for what they believe in. And when I saw the comments that had been made, I knew they were basically just wrong. So I called them out on LinkedIn. I think we can be a little bit scared
in our industry, because sticking our heads up doesn't result in the greater good for us individually or as a business.
But I'm not the kind of person who can just sit by and leave something when I know it's wrong.
We've written submissions, been on all the webinars and sessions where the commission has wanted more information directly from us as advisers. We were also involved when all the banks and lenders got called on to comment on the original submissions.
It's taken a lot of hours and I can see now why people stay quiet, but it's still not something that I could ever do. It would be nice to be acknowledged that as advisers we do a good job. ✚
EMBRACE AI OR DIE
AI can make an adviser’s life significantly easier, taking care of marketing and administrative tasks. Ignore it at your peril if you want to keep up.
BY PAUL WATKINS
Artificial Intelligence is here - and I’m sure you’ve all had a few tries doing stuff with it.
AI tools will only keep getting better, and will have an increasing impact on the mortgage-adviser industry.
Some tools make you much more productive, while others may require strategic adjustments. Here’s how AI can help - and why it’s essential to embrace it.
Marketing with AI
One of the most obvious areas where AI can help is marketing, which is the focus of these articles.
Blog posts, social media posts, posters, brochures, logos and client emails can all be created in minutes with well-prompted AI tools.
Often, these AI-generated outputs are better than what you might create on your own. No offence, but the times I have used AI have resulted in incredible outputs.
AI can also create highly-compelling landing pages, or even entire websites, sales-funnels, e-book content and powerful descriptions of your services.
These tasks, which used to cost thousands of dollars using advertising professionals, can now be done in minutes, saving you a huge amount of time and money.
AI tools exist which can generate videos from text and apply a machinespoken voice over them. If you do not want to front your own videos, you don’t need to – with minimal production costs.
You can even critique your own
work by using AI tools, with prompts such as, “How can this be made more compelling, for… ?”
I did that with this article after I wrote it. Not only did it re-word some parts, but added the AI tools listed below – most of which had not been known to me before.
‘Personalised marketing is the buzz word right now. Every client wants to feel like... the only one you deal with’
Personalised for clients
AI is also being successfully used by service providers to personalise the client experience.
Personalised marketing is the buzz word right now. Every client wants to feel like he or she is the only one you deal with.
If you have a thousand clients, it’s not practical to break your database down to segments of one. But AI can personalise the experience for clients in minutes.
It can analyse complex data from your database, and segment your clients for focused targeting. This level of personalisation can significantly enhance client satisfaction and loyalty.
Simplifying admin tasks
AI tools can automate many administrative tasks, significantly reducing the workload for advisers. For instance, AI-powered processing software can quickly and accurately extract relevant information from various documents such as tax returns and bank statements.
This automation not only speeds up the process, but also ensures higher accuracy, minimising the risk of errors which could delay the application.
Faster credit checks
Assessing the creditworthiness of applicants is a critical aspect of the mortgage-application process.
Traditional methods often rely on manual reviews of bank statements and credit checks; AI can quickly analyse vast amounts of data to provide a more accurate and objective assessment.
Machine-learning algorithms can evaluate financial histories and other relevant data points to predict the likelihood of being a good risk – along with how much a client can afford.
Using AI-driven chatbots
AI-driven chatbots are becoming increasingly common. They can provide 24/7 support, answering common queries and guiding applicants through the process.
These chatbots use natural language processing (NLP) to understand and respond to customer inquiries effectively.
By offering instant support, AI
‘AI tools can automate many administrative tasks, significantly reducing the workload for advisers’
chatbots enhance the customer experience, making applicants feel more informed and supported throughout the application process.
Legal advice & compliance
Law firms around the world are currently grappling with AI as it impacts their baseline services, such as conveyancing, simple legal documents, wills and more.
I tested this myself in a very low-level way. We updated our wills and Powers of Attorney, so entered our wishes into an AI tool, asking it to word the documents appropriately and in line with New Zealand law.
We then showed it to a lawyer. His response was that it was “fully compliant with New Zealand law” and didn’t require his input.
The cost to us? Zero! Checking your increasingly necessary compliance documents could be another opportunity.
The importance of prompts
AI tools such as the ubiquitous ChatGPT, along with myriads of other specialist tools which seem to be popping up almost every day, require ‘prompts’. These are the questions you ask it. And there’s quite an art to doing so.
They are not just, “How can I…,” but should typically be lengthy, very specific and acknowledge the expertise you are after.
For example, a prompt could read: “As a world-leading mortgage adviser and marketing expert,
specialising in first-time home buyers aged 28 to 38 with a household income of $120,000 and $200,000 saved (mainly through KiwiSaver), I would like you to write a blog post for me. It must include the 10 most commonly searched-for terms used by first-home buyers. The aim is to attract prospects, with a compelling offer.”
The point here is this: what you put in dictates whet you get out. Be extraordinarily specific. This also meets the current trend of personalised marketing.
Learn how to write prompts well; they are nowhere near as straightforward as you might think.
AI tools for advisers
Six AI tools in particular are in use by mortgage brokers: they are US-based, but within no time each country will have its own variant (and by the time this article goes to print, there will probably be 106):
• Zest uses machine learning to enhance credit underwriting.
• Blend streamlines document collection, verification, and data entry for the mortgage industry.
• KAI is an AI platform focused on conversational banking and financial advice. It powers virtual assistants, which can handle a wide range of financial queries, including initial mortgage advice.
• Better Mortgage is an online mortgage lender which leverages AI to offer a seamless mortgage experience, with personalised loan recommendations, automated document processing,
and real-time updates to applicants.
• Cleo is a financial assistant which helps users manage personal finance, including savings, budgeting, and debt management.
• Morty is an online mortgage broker which uses AI to match borrowers with the best mortgage products for their needs.
Get the picture? AI tools can offer some significant gains to your business. On the other hand, it could be a serious disruptor if not understood.
Think of what XERO did to accounting practices, what Temu and Amazon have done to traditional retail, what Uber did to taxis, and AirBnB to accommodation options (turning rentals into AirBnBs for a higher return).
The final critical issue is getting help. Get it NOW! There are many online courses, tutorials, YouTube videos and expert advisers out there who can help you embrace AI.
Take the time to learn the best tools: the ones most appropriate to you, the ones which will give you the best advantage, the ones which will help you stay ahead of your competition, as many will already be onto it.
There is no free lunch, of course. Most tools require a monthly fee, and this can be high for multiple users.
It’s likely you will need several tools, each designed for specific tasks, so choose wisely.
In my opinion? Embrace AI or die. ✚ Paul Watkins is a marketing adviser to the financial services industry.
PAUL WATKINS PAUL WATKINS
Collision Course
Three experts work together to get the right result after a client’s life-changing vehicle crash.
Prologue: As insurance industry professionals, we think about product development, technical innovations, challenges facing our industry, and many other topics that impact the way we work. However, it’s good for us all to take a moment to share stories about how a combination of great products, an expert insurance adviser and an outstanding claims service can make a positive difference for clients. This is one of those stories…
By the time Ray realised that another vehicle was on a head-on collision course with his car, it was too late. He turned the steering wheel hard to avoid the impact. But the reality was he was in a terrifying situation which would change his life.
To get the best outcome for our clients, you’d be surprised at the expertise needed when it’s time to make a claim: a client’s committed financial adviser, our dedicated Partners Life Claims team, sometimes ACC, and, in this case, an advocate
assisting Ray with his ACC claim.
Ray Farnsworth benefitted from these parties working proactively together to ensure he received all the financial support and rehabilitation he was entitled to when he had to make claims after a very serious car accident in 2018.
On that fateful day, Ray and his brother were travelling through south Canterbury and Ray was behind the wheel. On a particular stretch of road, coming in the opposite direction to Ray, and travelling at high speed, the other vehicle smashed into his car.
The list of severe injuries makes grim reading: Ray suffered a massive head injury, broken tibia, shattered femur and two fractured lower vertebrae.
The immediate aftermath of the impact is still vivid in Ray’s mind.
“I actually thought I was going to die. I could see the smoke and steam coming out of the engine. I couldn’t open the doors and I could see a lot of dripping blood,” he says.
A few years before the accident Ray had started his own construction business, employing seven staff. Getting personal life insurance was one of the last things on his mind.
“When I started my business, people
were trying to get money out of me for various things like an OSH safety person writing a programme for me, general insurances, levies. Everyone was getting their piece of the pie. As soon as the money came in it was going out.”
Ray also had a visit from an independent insurance adviser suggesting he take out a number of Partners Life personal life insurance products. Ray was very hesitant. But his wife Aimee, put some pressure on him and said: “Just do it.”
His Partners Life cover was designed to work alongside ACC and provide greater financial protection for Ray, his family, and the business. Should bad things happen, as it did for Ray, he has received a top up income benefit (over and above ACC), as well as three lump sum payments to compensate him for not being able to return to his building occupation. Partners Life have also been covering all of Ray’s life insurance premiums since the accident.
“It seemed expensive, and you think you’re bullet proof and you’re never going to have an accident, so you’re never going to need it. But now, I’m so thankful I took out my cover with
Partners Life and kept up with it.”
That life-changing accident in 2018 is the reason why Ray is so pleased he made that decision. On that day, the impact of the head on collision would have triggered a devastating financial impact if he hadn’t made the decision to take out the cover years ago.
When the time came to make a claim, Ray was supported by a team of insurance experts: his independent financial adviser, Wilhelmina Eveleens, Partners Life’s Claims team, and Samantha (Sam) Roebeck (Ray’s ACC advocate who Wilhelmina brought on board to ensure he received his full entitlements under the ACC system).
They understood the complexities of each type of cover, how to navigate the two different insurers, and helped Ray complete the necessary documentation. Luckily Ray, who was wheelchair bound, didn’t have to lift a finger.
“I couldn’t imagine going through it without Wilhelmina, Sam, Partners Life, and my wife Aimee who took care of all the emails and paperwork. They were amazing,” says Ray.
Partners Life paid the three lump sum benefit payments Ray was entitled to, over and above the ACC weekly compensation.
Wilhelmina, who is passionate about
planning the most appropriate cover for her clients through to managing their claims, is pleased at the way everyone came together.
“We have been able to provide him and his family with amazing financial support since the accident. Partners Life have paid his income benefits, and he has received his ACC payments,” she says.
“The payments of his three Partners Life permanent disability benefits were a turning point for Ray. It meant that he could pay off the mortgage which was a huge weight off his shoulders and helped him come out of the other side of depression.”
One of Ray’s biggest worries during his early recovery period was what would happen to his business, employees, and customers.
“The business got into debt because I wasn’t working. We had to pay more people to run the business and more wages to get the work done because I wasn’t there. The Partners Life payments helped get the business through and get my houses finished that needed to be finished. “
Once the payments came through, Ray was able to use some of the money to pay wages because the company was getting behind in paying staff along
with other expenses.
Ray continues: “When we got the permanent disability payouts from Partners Life, it also helped us tidy up the rest of the business, too. Because it was very stressful. I owed money to Mitre 10 and lots of other places and I had to pay everything off without going bankrupt. The money from Partners Life helped take all those problems away. Otherwise it would have been a nightmare.”
Since Ray started his business about 10 years ago, his whole view of personal life insurance has changed 180 degrees.
Ray’s advice to others about getting life and health insurance is crystal clear:
“Don’t hold back. Just go for it because even if you think you’re ten foot tall and bullet proof, you’re better off being highly insured than not. If you think you’re not going to need it, think again, because one day, out of the blue something can happen like what happened to me and without life insurance it could have been a whole lot tougher.” ✚
Ray’s Partners Life products included: Total Permanent Disability Accelerated (TPD), Trauma, Premium Cover, Income Cover Agreed Value, and Income Cover Indemnity Loss of Earnings.
“Insure yourselves. Not just the house.”
If you’re not urging all your mortgage-advice clients to get comprehensive health and life insurance, you’re leaving them exposed to unnecessary financial risk
BY STEVE WRIGHT
Finding new, receptive, clients is the most difficult part of being a life adviser, in my opinion.
Mortgage advisers have a big advantage in this area: you’re already seeing the client; they want something from you, and so want to see you.
Mortgage clients are also often massively increasing their financial commitments - and financial risk. This should make them more ready than ever to consider using a competent life adviser to properly protect them and their family.
If you leave it all up to the client to get the insurance the bank requires, the bank may end up being the only one protected.
Many Kiwis underinsured
Numerous studies show Kiwis are significantly underinsured and many have no protection at all. Advisers are essential, because most people don’t understand the (largely intangible) nature of human financial value, or their exposure to financial risk. Many understand the need to
insure their homes and ‘stuff’, but few recognise how valuable they are.
Most people think their house is their most valuable asset; it almost never is. Money owed on the house is also not the full extent of their financial risk. Not even close.
A working parent is really an income-earning machine for the family.
I’m quite sure most people insuring their ‘stuff’ would insure an ATM in their home which dispensed thousands of new dollars into their coffers each fortnight.
Even a relatively modest income, say $60,000 per year, is worth $2.4 million in nominal terms over a fortyyear work period - and that’s assuming no increases, ever.
Add annual increases of just 3% per year, and that income’s nominal value jumps to over $4.5 million.
Healthy till you’re not
Healthy people typically don’t see poor health, let alone death, as something to be concerned about –sadly, often not until it’s too late to get
insurance.
The reality is, everyone is healthy until they are not, and that dreaded early death or diagnosis of poor health or can come unexpectedly and at any time.
During 2022, total deaths in New Zealand numbered just over 38,500. Almost one in six of those deaths (17%) was people of working age (20 – 65).
But death is not the only risk. Disability (inability to work), whether permanent or temporary, also has a potentially devastating financial impact on families. They could lose the home you worked so hard to finance for them.
Poor health often comes with extra expenses, including, sometimes, very expensive medical treatment costs not publicly funded.
Government funding for cancer drugs has been a national topic lately. It’s a big issue, because cancer is quite common and the costs of some treatments can reach six, even seven figures.
On the day you read this, more than 70 Kiwis will likely get a serious cancer diagnosis, according to the latest
‘Many clients understand the need to insure their homes and ‘stuff’, but few recognise how valuable they are’
National Cancer Registry figures.
Not having the funds for lifesaving but unfunded treatment, or, having to deplete hard-earned savings to get it, is a terrible, but avoidable, dilemma.
The right mix of health and trauma insurance can often be a solution. Private health insurance, if properly selected, can fund regular private health care not funded by the
person’s income to fund their dreams.
I got into life insurance because I love the positive effects life insurance can have when death or poor health strikes: no financial hassles or stress, no destruction of family wealth; piece of mind, choices!
According to the Financial Services Council, life and health insurers pay around $3,000,000,000 (that’s $3
‘Most people think their house is their most valuable asset; it almost never is’
Government, either at all or within a reasonable time.
Trauma insurance can pick up related non-medical costs and costs of treatment not covered by health insurance.
Life and disability insurance can’t prevent the tragedy of a death, poor health or disability, but it can absolutely prevent the financial disability of all the other family members who rely on that
billion) each year in claims. Consider for a moment not just the impact on claimants, but also the wider social benefits of those claims’ payments.
‘Fundraising’ in advance
I was once told by a lady guest (at an adviser’s ‘office warming’ of all places) that she and her friends didn’t believe in insurance, they felt fundraising was more appropriate.
It didn’t go down well when I explained that this was exactly what life insurance is: structured fundraising in advance, and with much more certain financial outcomes for people in need.
As a ‘mortgage-only’ adviser, you may be expected to encourage the client to see a life adviser, maybe even to refer the client to a competent life adviser, as many do.
It’s a simple thing that takes almost no effort - and the financial consequences of not doing it could be potentially catastrophic for your client.
If you’re not habitually referring clients to a competent life adviser who can offer them a full protection plan, how much financial loss might your clients be exposed to? ✚
With qualifications in economics, law, tax and financial planning, Steve Wright has spent the last 20 years in sales, product and professional development roles with insurers. He is now independent, helping advisers mitigate advice risk through training and coaching.
The Top 10 stories on tmmonline.nz
A lot has happened in the market since the last edition of the magazine. Here are the most-read industry stories from tmmonline.nz
01 WHY RESIMAC CLOSED SHOP IN NZ
Resimac New Zealand’s biggest writer, Jeff Royle, says the lender had great products but was trying to act like a bank.
02 ANZ SAYS IT DOESN'T DISCRIMINATE AGAINST MORTGAGE ADVISERS
ANZ Bank New Zealand says its data shows it doesn't discriminate in terms of processing times between mortgages its own staff originate and those originated by mortgage advisers.
03 KIWIBANK FACING CRIMINAL CHARGES
The Commerce Commission has filed criminal charges against Kiwibank, alleging systemic breaches of the Fair Trading Act.
04 INTEREST RATE CUTS MIGHT BE NEARER THAN THOUGHT
Despite the heavy hand of the RBNZ continuing to hurt households and businesses, New Zealand’s smallest main bank is confident interest rates will move downward as soon as November.
05 NEW CODE BRINGS COMMON SENSE TO LENDING - FSF
Lenders are happy the new Responsible Lending Code has landed with no nasty surprises.
06 WHICH BANK IS WINNING THE LENDING RACE?
Jenny Ruth digs into the latest Reserve Bank data to find how which banks are writing the most home loans.
07 FAMNZ TO COMCOM: DON'T FIX WHAT AIN'T BROKE
The Commerce Commission shouldn't be “trying to fix something that is not broken,” according to the Finance and Mortgage Advisers Association of New Zealand (FAMNZ).
08 PORTALS FOR HOME LOAN APPLICATIONS? BE CAREFUL WHAT YOU WISH FOR
A mortgage adviser who has worked in both Australia and New Zealand isn't a fan of the Australian system, which accepts mortgage applications through an old portal - and says much depends on the portal.
09 BIG WEEK FOR CUTS, AND ANZ TWEAKS FORECAST
It was a pivotal week for monetary policy with two major central banks cutting interest rates for the first time in more than four years.
10 RESIMAC PULLING OUT OF NEW ZEALAND
Resimac is closing down its New Zealand home loans business.
To keep up with all the news make sure you check www.tmmonline.nz regularly. Or you can get the news and rates update sent to you each day.
No Reg. valuation required
Any location in New Zealand
No consumer lending
Capitalised interest available
Residential, commercial and rural
No SOP required
Recently funded investments:
Torybay, Auckland
Finbase is a trusted non-bank lender, who offers tailored loans for property investors, developers, and traders, providing swift funding without main bank restrictions.
We offer advances up to $2 million without income verification. Finbase provides First ranking mortgages for short-term property projects, with a maximum 12-month loan term.
Maximum lending of 60% of property value.
Westport
Security description: Property 1: 270m²
commercial building on circa 720m² freehold land. Property 2: 210m² commercial building on circa 600m² freehold land
Combined valuation: $3,200,000
Interest rate: 11%p.a. paid monthly in arrears
Purpose of funds: Funds are being used to purchase a business
Exit strategy: Borrower will repay the debt using their own cashflow, or refinance to a main bank
We assess loans based on LVR and the individual deal. We require first mortgage security over the property and a clear exit strategy.
Security description: Three bedroom home, located on circa 550m² freehold section
iValuation: $355,000
Interest rate: 12%p.a. paid monthly in arrears
Purpose of funds: Refinancing borrower’s existing lender and consolidate other business loans
Exit strategy: Sale of the security asset
Glenholme, Rotorua and Tokoroa
Security description: Property 1: Three bedroom home on a half share of circa 1,010m² cross-lease (freehold) section. Property 2: Two separate, three bedroom homes. Situated on a single freehold title of circa 960m²
Combined valuation : $1,245,000
Interest rate: 12%p.a. paid monthly in arrears
Purpose of funds: Funds used to settle the purchase of property one, plus refinance the existing mortgage on property two Exit strategy: Refinance to a main bank
Finbase offers several types of loans including bridging finance, property trading finance, and equity release.
Jack Patel