By Gareth Vaughan
Whilst no rivals have officially followed TSB with a carded fixed-term, 10-year home loan offer, TSB's CEO Kevin Murphy says other banks are matching it.
TSB launched its 5.89%, 10-year offer in February stirring much interest in the banking industry and gaining the bank significant media coverage given it's the first time a New Zealand bank has offered a 10-year mortgage.
Murphy won't say how many customers have taken up the offer to date, nor what the value of lending TSB has done through 10-year mortgages is, saying this information is commercially sensitive. However, Murphy did tell interest.co.nz the 10-year offer has "significantly exceeded expectations."
Although staff and management at other banks have watched with interest, no other banks have yet launched their own carded 10-year mortgage offer. However, Murphy says some banks are matching TSB.
"The anecdotal evidence we have is that banks are matching that. Whilst they might not be necessarily publicly advertising it, our understanding is that banks are writing deals of 10 years," Murphy said.
"Once someone comes out with a novel product over time others do tend to follow, and it's just a matter of when that happens. We do think they will."
However, other bank executives spoken to by interest.co.nz have not been enthusiastic about following TSB's lead. One of them, ASB CEO Barbara Chapman, said in February ASB would watch with interest, but over many, many decades long term mortgages - even of five-years duration - hadn't been favoured by ASB customers.
And another, SBS Bank CEO Wayne Evans, said in March that although the 10-year offer had generated a lot of attention for TSB, he wasn't convinced it would generate a lot of enquiry because "10-years culturally, in the mindset of people, is just a little bit too long."
First home buyers taking up the offer
Murphy said, however, there is a sector of the New Zealand market that's ready for 10-year mortgages.
The New Zealand 10-year swap rate was at 3.74% on Friday.
TSB's standard break fee policies apply to its 10-year loans, which can be transferred to another home if a borrower moves house. Borrowers can also get a period of the loan as interest-only.
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