Wizard Disappointed With Guarantee Tactic

Press Release
Wizard Disappointed With Guarantee Tactic

Wizard Home Loans today condemned Kiwibank’s so-called guarantee as a dreadful means of attempting to lure business

Wizard New Zealand head, John Grant said, “The offer by Government backed Kiwibank provides a so-called guarantee of having the lowest rates and will refund the difference if the borrower can show that an alternative would have been cheaper. However it comes with so many conditions that it is unlikely to see many claims paid.

“Firstly, there are more than 60 lenders operating in the NZ market but the guarantee only applies to the five trading banks. These banks are traditionally the highest cost lenders. The “guarantee” excludes specialist lenders like Wizard who consistently offer a more competitive home loan offer than banks.

“Secondly a borrower needs to have a mortgage running for at least six years before the guarantee is effective. But everyone in the lending industry knows that the average life of a mortgage is four point six years.
This time limit makes a mockery of the Kiwibank “guarantee”.

Mr Grant says it gets more complicated from there, “Thirdly it includes an ‘apples for apples’ clause. This means that at the end of six years a comparison of equivalent products needs to be done showing an exact match of the Kiwibank loan..

“For example it is common to fix part of a loan and float the balance. If the period of fixing is two years and then floats for two years and is fixed for the final two years, you can imagine how difficult it would be, for the average person, to do the comparison calculations.
“Kiwibank says this can to be done by the borrower, an independent third party or the bank. This would be very complicated for the average borrower, leaving them with the choice of paying an independent person to do the calculations or having to rely on Kiwibank to do it for them. “

Mr Grant says there is a definite need for home loan lenders to become more open with borrowers. “Wizard Home Loans has been a major campaigner for increased transparency and disclosure in home loan advertising. In Australia, legislation has recently been passed introducing fines of up to $500,000 if the “true interest rate” is not used in all home loan advertising. “Wizard led the industry charge to have this legislation introduced and is the only lender to use the true rate.

Wizard Home Loans has been operating for over six years and now has more than 140 branches in Australia and New Zealand and is settling over $450m in new loans per month. In New Zealand Wizard has 11 branches and will soon open a further three in the Wellington region.

ENDS

© Scoop Media