Brown said that as mortgage rates rose more borrowers may encounter difficulties and she urged them to approach lenders as soon as possible.
“So often we see people on the brink of a mortgagee sale and with a complaint. They have left it too late to help themselves,” Brown told says.
She said that her office had seen a decline in the number of complaints about mortgages in recent years but she thought this was probably due to favourable economic conditions. Now that mortgage rates were rising, more borrowers might have cause to complaint about their lenders.
The Ombudsman, whose service covers the major banks, representing the majority of mortgage lending in New Zealand, also warned borrowers to take care when discussing changes to loans on the telephone.
She said that she had seen cases where borrowers had discussed new fixed rate deals with their banks on the telephone after receiving letters giving notice that an existing deal had come to an end. Misunderstandings had arisen when the banks had signed the borrowers up for a new fixed term without the borrower realising they had committed themselves.
A borrower might find a better deal before the current one expired, but when they tried to move they were locked in and faced early repayment charges to switch.
Often the details of the discussion between the borrower and lender were not properly recorded and Brown urged borrowers to ensure they understood what had been agreed in telephone conversations.
The Ombudsman’s office has also dealt with a number of cases where borrowers unwittingly signed up for loans much larger than they intended because banks made mistakes in setting up the mortgage.
“What has normally happened is that the borrower has ended up buying a more expensive home than they could afford. They have an asset that could be valuable in the future. It would be unfair on the bank not to recognise that but (the borrower) has a cost that they did not expect to have.
“We tend to look at what the extra cost of borrowing is. If the bank is at fault we tend to make compensation for that.”
