Sovereign, which is essentially owned by ASB Bank, moves its rates at the same time and by the same amount as the bank. This week though it was only Sovereign which moved.
David Drillien says that Sovereign is taking a more competitive position in the market and this pricing change is one visible sign of that move.
The company's strategy is to use brokers to sell its home loans, but home loan sales are also used to sell life insurance.
Brokers who sold a certain amount of life insurance previously could offer home loan rates 15 basis points less than Sovereign's carded rate.
Drillien says the company is doing away with that position as most brokers qualified for the discounted rate, it was adding an extra layer of complexity to its offering, and it wasn't fair that the customers could potentially miss out on the better rate due to which broker they used.
Besides the rate cut Sovereign is loosening up its lending criteria and will be offering loans up to 95% of a property's valuation.
Drillien says there are some other initiatives being worked on with its home loan offering at the moment.
