"The grounds were we believe the advertising is misleading in as much as that it implies that they offer a rate because they don’t use brokers," says NZMBA chairman Geoff Bawden.
"It implies it’s a better rate or a better deal than what might be obtained by a broker which we believe is misleading," Bawden says.
In April, BNZ started its high profile campaign using the logo: "We’ve cut out brokers to give you a great home loan deal."
Most banks pay upfront commissions between 0.6% and 0.8% of the total loan amount and many pay on-going trailer commissions on top of that. Other sales channels also have their costs such as branch networks and staff salaries.
"I think it’s quite a dangerous exercise to chose one fixed rate (BNZ was aggressively promoting a two-year fixed rate) in the market and to say you can offer a better rate because you’ve cut out brokers," Bawden says.
All sorts of other factors, other than the interest rate charged, come into play to decide what the best deal available is, he says.
BNZ’s two-year rate hasn’t always been the lowest two-year rate available in New Zealand and the other banks are known to have matched its rate.
