Lenders, regulators and government must do more to bring greater competition in the home lending sector, according to the peak body representing New Zealand’s finance and mortgage advisers.
The call from Leigh Hodgetts, NZ country manager of the Finance and Mortgage Advisers Association of New Zealand (FAMNZ), comes after the shock withdrawal of non-bank lender Resimac from New Zealand.
She said while New Zealand punches above its weight in many sectors, “in the world of banking, finance, lending and mortgages, we are behind and must change the way we look at lending, particularly mortgages.”
“It’s crazy that a lender has pulled out of our market quoting a restrictive regulatory environment.”
Ms Hodgetts said finance and mortgage advisers are a large part of the solution, yet government and regulators have looked at the sector as an ‘add-on’ rather than central to competition.
“Even though there seems to be some lack of understanding about mortgage advisers, even within government agencies, around fifty per cent of New Zealanders use a finance and mortgage adviser for their mortgage.
“This indicates that consumers want support, expertise and lending options when making the biggest decision of their lives,” she said.
She pointed out that in many other western nations the percentage is much higher, including Australia where mortgage advisers (called brokers) write over 70 per cent of mortgages.
Research in Australia has found that 86 per cent of Australian mortgage broker clients trust their broker and 83 per cent of mortgage broker clients say they will continue to use a mortgage broker.
“The vast majority of Aussie borrowers can’t be wrong, yet here we still have questions around competition, conflicts of interest, and disclosure, which are based on misinformation not facts.
“Finance and mortgage advisers have far more strict criteria than bank staff around compliance, ethics, regulation, and financial advice,” Ms Hodgetts said, pointing out that advisers are obliged to act in the best interests of the borrower, “something banks can’t do because they are selling a product.”
“The bottom line is that we need a more competitive lending environment in our country, and finance and mortgage advisers drive this.
“We must move on from the old ways and embrace the new, and the winners will be consumers.”
