Major banks' tough lending rules a turn-off
Kiwi borrowers are being heavily scrutinised by major banks on their loan applications, so brokers are choosing to work with non-banks as a result, says an Auckland adviser.
Named one of NZ Adviser’s Elite Women for 2022, Loan Market’s Linda Eagleton (pictured) said banks were subject to strict regulations and ongoing tight LVR restrictions. This made it harder than ever for advisers dealing with banks and trying to assist their clients with loans.
“The banks do not have much breathing space to make decisions or freedom around parameters,” Eagleton said. “Banks have their hands tied more than ever before and advisers are being challenged by trying to keep up with the changes.”
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Eagleton said the rise in popularity of non-banks had strengthened as CCCFA restrictions and tighter LVRs affected the industry.
“Most banks are hard and fast if you are lending on your primary place of residence and they will not let you lend past your expected retirement age,” she said.
“However, you get people aged in their 60s for whatever reason require a 30-year loan term for the time being, who have good strategies in place for when they retire. These strategies might not be acceptable for some banks as they do not tick a box. A circumstance like this is where non-banks can step in and resolve the problem much faster.”
Eagleton said she had found certain banks empowered their staff to be more confident in making decisions, rather than focusing on whether a client simply ticked a box or not.
“Some banks are very understanding that as advisers we are real people submitting loans for real people,” she said.
“It comes down to how a bank enables a person to make calls and understand credit policy. I think more Kiwis need to engage advisers because we can partner with the best bank or non-bank who we have good relationships with to help get a client’s transaction over the line. A good adviser with good relationships is very important.
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Eagleton said as an adviser today, it was important to form a tight network of other good quality mortgage advisers to collaborate with.
“We have group chats and discuss trends we are seeing and answer any questions others in the group might have,” she said.
“I find this much easier than keeping abreast of knowing everything yourself. It is so important to surround yourself with like-minded, good advisers who are writing good quality business.”
Eagleton said she believed more mortgage advisers were partnering with non-banks.
“I think every adviser should have good working relationships with non-banks and if they aren’t, they definitely should be,” she said.
