'Non-genuine savings program' a hit
New Zealand Mortgage Funds says its latest product has been a hit with brokers.
Monday, February 17th 2003, 7:02AM
by Jenny Ruth
New Zealand Mortgage Funds founder Sean Davis admits his non-bank home lending venture got off to a slower start than he would have liked but says business is now accelerating nicely.
Most recently, that’s due to a new product launched last week called a "non-genuine savings program." Davis explains that normally lenders want to see evidence that their customers have established a savings pattern, usually saving 5% or more of the deposit needed to buy a house.
"What we’re saying now is if you can’t do that, but you can afford to borrow (the deposit) or have someone gift it to you, we’ll lend to you," Davis says. The product is only available to those with a completely clean credit history.
Currently, customers have to find someone else to lend them the deposit but Davis’ firm is working on launching a second mortgage product which will do the job.
Other products he offers are floating rate loans, "no financials" loans for those who are unable to produce financial records and his firm is moving into the non-conforming area, loans for those with credit impairments.
Davis, a former mortgage broker, founded NZ Mortgage Funds a year ago using Australia-based wholesaler Interstar to provide funding.
In May last year, he had 20 brokers signed up but now claims 844 on his database, although only about 400 deal with him on a regular basis.
"We’re behind our targets. It’s taken longer to become accepted in the market place, but we’re still here and we’ve shown that we’re serious," he says.
A key difficulty has been establishing credibility with brokers and that "we’re not a fly-by-night company."
But if lending continues at its current rate, he should reach his initial aim of building a mortgage book of at least $300 million after three years.
The firm deals only through mortgage brokers rather than directly with borrowers, giving brokers an assurance that it won’t try to take over the client relationship.
Davis’ next goal is to persuade more brokers to use non-bank lenders like his firm by preference.
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