We thought we’d do a bit of analysis of the 1,500 mortgage reviews we did over the past three months. I don’t have a lot of spare time so we grabbed a sample of 150 of our mortgage reviews and ran some numbers.
This first graph shows share of reviews versus market share of housing. The hypothesis here is that only people who feel they may be missing out (or have the wrong structure) will want a review. Overall Kiwibank customers felt in more need of a review.
We then went and qualitatively scored the structure of each mortgage. We scored a 1 for people who got their rates right (with good structures) and a 5 for solutions that were “poor.” Amongst the banks ANZ scored best at 2.8 and Kiwibank worst 3.4.
Lastly, we thought we’d look at the proportion of “poor” mortgage advice. Our interpretation of this was basically anyone who took a three- to five-year fixed rate in 2008 (there was a degree of leniency for customers who split their mortgage across multiple fixed-rate terms.) Kiwibank and BNZ stood out – and this isn’t surprising because both have focused on rates and both have advertised long-term rates at the top of the interest-rate cycle.
Kiwibank’s standard response to this is that they are simply “retailers” and take no responsibility for how customers decide to structure their mortgages. Some time during the next few weeks I’ll quantify the actual cost of poor advice.
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Squirrel is an independent mortgage broking and advisory business. We are happy to help you get the best out of your mortgages whether that is buying property, refinancing or simply restructuring everything to make it work better. If you are buying a new home then you can apply online with us and we’ll save you a bucketload of money, time and stress. Sign up for our free newsletter and get emailed our latest mortgage advice and insights on the housing market.
JB (author of this blog) is the former general manager (products) at ANZ National Bank and has managed over $15 billion of mortgages.
