New borrowers with loans in that LVR range will pay an extra 0.25% on top of their interest rates. Existing clients will not be affected.
The bank had previously only applied a margin for lending above 85%. It charges an extra 0.5% for borrowers with LVRs between 85% and 90% and 0.6% for loans up to 95%.
Banks are being required to hold more capital against housing loans. All charge something for low-equity loans but borrowers can often negotiate it down.
Westpac and BNZ charge a premium on interest rates but all of the others charge a one-off fee.
Kiwibank imposes the highest low-equity fee, of 0.5% between 80% and 85% LVR, and 0.75% between 85% and 90%. Above that, borrowers are charged 3% of the loan value. The fee is high because Kiwibank outsources its lender's mortgage insurance, which other banks self-insure.
ANZ charges a fee of 0.5% between 85% and 90% and 1.25% for loans over 90%. ASB's range from 0.25% to 1.2%. BNZ's premiums are charged over 85% and vary within the same range.
