Superhomeloan Offers Welcome Alternative
1 November 2004
Superhomeloan Offers Welcome Alternative In Mortgage War
Research shows consumers worry about paying too much over a fixed term – while industry belief that OCR is at top of interest rate curve may prove them right
WELLINGTON, 1 November 2004 – Superbank today continued its campaign to bring innovation to the banking industry by announcing a guaranteed variable rate option to SuperHomeloan. The new mortgage combines the best of both mortgage worlds – offering the flexibility and ‘no strings’ nature of a heavily discounted variable rate combined with a guaranteed maximum rate of 7.49 per cent until May 31 2005.
This means that even if the official cash rate (OCR) were to rise in the next six months, Superbank would guarantee no increase on the 7.49 per cent interest rate. However, it is widely thought that the OCR has reached its peak and may start to go down over the next year. If this becomes the case Superbank’s new loan, unlike a fixed term loan, would also fall, reducing customers mortgage costs.
Research commissioned by Superbank shows some consumers are concerned about taking fixed-term mortgages at present, believing rates may soon start to fall leaving them with higher costs. The survey showed 38.5% of people expect the interest rate to rise a little, then drop off later in the year, while 15.5% are most concerned about paying too much when rates fall. Superbank believes that offering a guaranteed low variable rate of interest until June 2005 is compelling, allowing consumers to reassess their options at any point in the interim in light of the prevailing interest rate environment.
“The guaranteed variable rate helps people better manage their risk rather than attempting to avoid it, which of course is impossible. We are offering fixed-rate certainty without the long-term strings,” says James Munro, chief operating officer of Superbank. “Everyone ideally wants to fix at the bottom of the market – not at the top. As a number of market commentators have observed, with the cost of fixed rate loans starting to fall it is questionable as to whether a two-year fixed mortgage is the most sensible option at this point.”
“Our research shows that people
want options. Superbank is committed to delivering market
innovations that offer these options in a way that assists
people in managing their risk. Superbank provides its
customers with choices rather than simply trying to corral
them into the discount of the day. If our customer wants a
hot two-year rate, we will provide it. If they want to
manage their risk more actively though this product, we will
The research also shows that women tend to be more practical than men when it comes to mortgage issues. Women are twice as likely (10 per cent) than men (5.5 per cent) to be most concerned about feeling short-changed when stuck on a high fixed rate. Men tend to be more influenced by fears of big rate rises, even if they don’t expect those rises to actually happen.
Consumers nationwide can get information about this new offering from Superbank’s website (www.superbank.co.nz) or by calling free on 0508 226 546. SuperHomeloan is distributed through Superbank mobile managers, direct by phone and through six leading mortgage brokerages; Mike Pero Mortgages, Mortgage Choice, Mortgage Express, Mortgage Link, Mortgage People and Ray White Financial Services.
More from the Superbank Home Loan Research Nationwide telephone research by New River polled 482 people over the age of 18 in early October. Other interesting findings included:
While 38.2 per cent of people currently have a mortgage, 3.3 per cent are still planning to get a mortgage in the next six months despite the uncertainty 48 per cent expect interest rates to keep rising over the next year, while 38.5 per cent believe that the rate will rise a little further and then drop. Nobody believes rates will fall The threat of a big rate rise looms largest as the main concern for 40 per cent Expectations and feelings on interest rates often run in conflicting directions. For example, 40 per cent of people who think rates will drop in the future still plan to fix their mortgage. Conversely, 15 per cent who expect rising rates are also some of the most concerned about paying too much if they fix and interest rates subsequently go down For 15.5 per cent, being stuck on a fixed term while rates fall worries them the most
About Superbank: Superbank is the trading name of St.George Bank New Zealand Limited. Superbank is a joint venture between Foodstuffs New Zealand and St.George Bank Ltd of Australia. St.George Bank Australia is a listed company in Australia and has assets of over AUD $55billion. The Foodstuffs group of companies (New World, Pak 'N Save, Write Price and 4 Square) is the 4th largest trading organisation in New Zealand. People can open an account very simply: by calling 0508 226 546 or by picking up an application form from a supermarket and posting it in.