NZCU Baywide open for 95% mortgages, increases lending cap to $600,000

Credit union NZCU Baywide will lend up to $600,000 to house buyers with just a 5% deposit.

It has increased its loan-to-value ratio (LVR) restriction on home loans to 95% from 90% and pushed its lending cap up by $200,000 to $600,000.

As a credit union rather than a bank, the Reserve Bank's LVR restrictions don't apply to NZCU Baywide. As of June 30 last year, CU Baywide had $222.461 million of home loans outstanding of which $138.247 million had LVRs of more than 80%. 

Reserve Bank data shows housing loans from non-bank lending institutions have surged by $834 million, or 57%, over the two years to April reaching $2.295 billion. However, that's still just 0.92% of the $248.510 billion of total housing lending, which is dominated by banks.

The Hawke's Bay-based NZCU Baywide introduced its now increased lending cap as recently as November last year, marketing manager Melissa Abraham-Smith says. It also offered 95% mortgages until dropping this to a 90% limit in November.

"The Baywide home lending story has always been about helping first home buyers. We are incredibly proud to have helped thousands of Kiwis achieve that first step on the property ladder. To keep the dream alive we have increased our LVR limit to 95% and our lending cap to $600,000," Abraham-Smith says.

She says NZCU Baywide has more than 27,000 customers and is one of New Zealand's biggest credit unions by assets. As of June 30 last year, it had $312.296 million of assets. It was established in Hawke’s Bay in 1971 as the Whakatu Freezing Works Employee’s Credit Union, and now has 16 branches around the central and lower North Island, plus online services.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

5 Comments

They helped us out big time as first home buyers. None of the banks would look at us because I was the only one at work, my wife is an Early Childhood Teacher but she left her job to go on extended maternity leave. The amount we were borrowing was only 3 x My Salary, we had a 25% deposit and no debts but if i was fortunate enough to hear back from any of the banks they cited the "Responsible Lending Code".

Definitely an opportunity for FHB during the winter (at least) cool period for property prices.
Adrian Orr has commented that he sees property prices as being fairly stable in the medium term with a 2 to 3% pa future growth. Given all the speculation as to the future of the market, he/the RBNZ are the one person/organisation I would be listening to regarding this as they are the only ones that have some influence on the market (i.e. managing OCR and LVRs). It is not in the banks interest to see a "crash" in the property market due to the negative effect on the wider economy. Increasing property prices - such as during the GFC - give people as greater sense of wealth and a propensity to spend so is a stimulus effect to the wider economy (and a contributing reason as to why the NZ economy did well during the GFC). Equally, neither the RBNZ nor the government are keen to see the property market crash due to the negative impact on the wider economy.
The property market is likely to be subdued in the foreseeable future as the Auckland market is currently over-priced in terms of both rental yields (so investors are selling rather than buying) and the house price to income ratio.
So if a FHB is thinking of buying, it is not a case of trying to wait to pick the bottom of the market. The market may cool - especially during the winter period - but the best buys will come from finding an individual property below market value from a vendor under a little pressure. The low success rates at auctions suggest that there will be some of these vendors (e.g. under pressure due to a shift or marriage breakdown).
So given the future stability of the market, a good time for FHB to take advantage of good rates such as this, or use it rate to negotiate with their bank. While mortgage repayments may need a serious commitment now, the future for wage growth is really positive (e.g. yesterday's government announcement) so the pain is not likely to be long term with potential wage increases. There is some indication of future interest rates rising (e.g. USA) in the medium term, but a return to the historically NZ high rates of 7 to 8% seem a long way off.
So FHB, despite winter, the sun shines a little for you are feeling left out the past few years.

Do you make a habit of cut'n'pasting the same advertorial in multiple stories?

Are you under pressure to unload an overleveraged portfolio or something?

Dp

Interest rates are substantially higher than the major banks however? NZCU are advertising 5.45% and Kiwibank 4.79% to fix for 1 year for over 80% LVR. There seems to be a substantial risk premium built into their rates.