Rob Tucker, a founder of newly-launched No 8 Mortgages says that specialist lenders may thrive in the current market. Banks have tightened their lending criteria and cut back on lending to borrowers who are not standard risks. This creates an opportunity for a company like No 8.
“Our competition is falling by the wayside,” he says.
No 8 is a streamlined, low-cost operation that draws most of its funding from Foundation Securities, which sources its funds from the New Zealand market. Tucker says that Foundation was managing its lending in house for a time and No 8 has taken on this role.
He says that there is uncertainty over how the economy will be affected by fall-out from the credit crisis and global stock market falls but that the potential exists for No 8 to do well in its sector of the market.
The fall in property prices makes it easier for lenders to assess risk and they can be more certain about the value of their security.
Tucker is better-qualified than most to judge the state of the market. He is a former chairman of the New Zealand Mortgage Brokers Association, and recipient, in 2007 of the Geoff Chong Memorial Award for services to the profession.
No 8 does not aim to compete with banks on interest rates but its products are aimed at borrowers who probably would not be considered by banks. There is a loan aimed at borrowers who are “asset rich” but who cannot easily demonstrate their ability to service a mortgage and also a low-documentation loan for borrowers who self-certify their income.
The company is marketing loans through brokers it invites to work with it. The standard upfront commission for brokers is 0.65% with a 0.10% trail commission but brokers can choose to forego some commission to pass this on to customers as a lower rate of interest.
