Resi launched its "gold" product last September but Christchurch-based Global Home Loans say they’ve been offering such flexibility since February 2001.
Global was founded by partners Louise Ledger and Maree Rae, mortgage brokers who were frustrated by the dearth of non-bank lenders in Christchurch.
She and Rae decided to set up their own lending operation and spent about a year looking for a wholesaler, eventually getting the green light from Australia-based AMS in early 2000.
Global now deals with about a dozen mortgage brokers and in late 2004 gained another wholesale provider in Australia’s Interstar.
While Global doesn’t itself offer non-conforming loans, it has arrangements with Bluestone and Liberty. But otherwise, the Global partners are no longer in the mortgage broking business.
Ledger says there’s too much potential for conflicts of interest in being both a broker and a lender.
Brokers who organise loans through Global can either settle for the standard arrangements or they can decide the difference between the rate Global provides them and what interest rate they charge the client, effectively deciding their own commission structure.
"If we thought the interest rate was outside the market, we would definitely say so, but that’s really between the broker and the client," Ledger says.
Meanwhile, Resi director Ros Kirkland says her company’s "gold" lending product is performing extremely well. While it is restricted to brokers who can place at least $1 million loans with Resi each month, the "gold" product now accounts for a good 60% of Resi’s overall lending, she says.
Unlike Global, Resi restricts the amount of interest the client can be charged to its standard retail rates, allowing the broker to charge an upfront fee of up to 1% of the loan amount.
Neither Resi nor Global were prepared to reveal the sizes of their loan books.
