What can mortgage advisers feel proud of this year?

As 2023 draws to a close, leaders from within the mortgage and finance industry are acknowledging the hard work and dedication of mortgage advisers.

Avanti Finance, Finance Advice New Zealand, First Mortgage Trust, Pepper Money and Prospa reflect on a year of regulation, rising interest rates, extreme weather and inflation. 

The mortgage and finance industry has collectively played a significant role in supporting New Zealanders and helping them navigate the complexities of the market, they say.

The cost-of-living, coupled with rising interest rates, have been front of mind for advisers and borrowers this year, the Reserve Bank having increased the official cash rate a further three times in February, April and May.

Mortgage advisers have continued to support customers, including those wanting to borrow to buy homes, and existing borrowers rolling off lower fixed mortgage rates.

What can mortgage advisers feel proud of?

Avanti Finance general manager property Ian Boyce (pictured above left) said that weather events, combined with the high cost-of-living meant that a number of New Zealanders have been doing it tough.

Despite this, the majority of Avanti Finance customers have made good financial decisions and have been able to continue servicing their loans, he said.

“While we saw a slowdown in the property market this year, financial advisers were still very busy providing advice and helping customers to restructure their loans or make changes to get through, demonstrating the value that the industry provides to New Zealanders,” Boyce said.

Financial Advice New Zealand interim CEO Tony Dench (pictured above second left) acknowledged the extent to which mortgage advisers have had to adapt to meet clients’ requirements in a rapidly changing market.

“Rising interest rates amid a period of high inflation have challenged household budgets and mortgage advisers have shared the stress of helping borrowers to access appropriate funding levels and keep up with repayments,” Dench said. 

“Everyone in the financial advice sector has also worked hard to embrace increased regulation and lift the profession at the same time as supporting clients.”

First Mortgage Trust head of lending Sam Burgess (pictured above third left) said that the mortgage and finance industry could look back on 2023 with a sense of “accomplishment and pride”.

“Despite facing a turbulent economic landscape, the industry has shown resilience, as we've continued to support Kiwis by providing finance solutions,” he said.

Burgess said that the industry’s comradery and collective support had been a particular standout this year, as was demonstrated by strong attendance and support at key aggregator events. These are testaments to the unity within the non-bank sector, he said.

“For us as a business, being a part of these events has been incredibly rewarding. It allows us to reciprocate the support we receive from aggregators and to strengthen our ties within the industry,” Burgess said.

Pepper Money NZ country head Campbell Smith (pictured above right) summed up 2023 as “a year of change and adaption”.

At a time when it can seem so many New  Zealanders are being overlooked, advisers and the industry are helping clients to understand the options are available to them, Smith said.

Despite the challenges of 2023, together the industry continues to go “from strength to strength”.

“More borrowers with diverse financial backgrounds are looking for someone who understands them and is willing to take a look at their unique situation,” Smith said.

“That’s why advisers are now more crucial than ever before, as more New Zealanders seek loan options and advice on how to choose the right loan in a complicated and fast-moving marketplace.”

Prospa senior business development manager Huia Manuel (pictured above second right) said that in what had been a challenging start to 2023 with extreme weather conditions, it was heartening to see the industry rally together to “aid partners and customers”.

What can lenders feel proud of?

In recognition of the typically busier Spring selling season, Avanti Finance ran a campaign offering a cut-price variable home loan rate for near-prime home loans with an LVR up to and including 80%.

“It’s fantastic that we could give a large segment of our customers a rate closer to that of a main bank, assisting many to take their first step on the property ladder,” Boyce said.

In continuing to support the New Zealand lending market, First Mortgage Trust was able to achieve strong financial performance for investors. The non-bank lender has witnessed a “steady increase” in its investment rate across the past seven quarters (since March 2022), closing the year “on a high note”, with an annualised pre-tax return of 7.31%.

“This achievement is a clear indication of our unwavering commitment to providing consistent returns for our investors, and it's a milestone we're excited to share with our investors,” Burgess said.

Additionally, First Mortgage Trust transitioned to a new technology platform, an important step to support continued future growth and service improvements, he said.

Pepper Money New Zealand reduced its serviceability buffer across the board to 2%, made ongoing changes to its residential offering (including increased loan limits, loan terms and interest-only periods), refreshed its adviser website and delivered quarterly Insights Webinars, providing economic and industry insights.

“Pepper Money’s commitment to helping people succeed is at the centre of all the decisions we make. Our partnership with advisers makes it possible to bring an array of options to New Zealanders who deserve a shot at making their goals a reality,” Smith said.

Prospa reached $500 million in loan settlements and ran its annual nationwide roadshow spanning Whangarei to Dunedin. With an average loan size of $50,000, the non-bank lender has funded more than 10,000 businesses over the last four years.

“We had an incredible year connecting and working with more and more advisers,” Manuel said.

“Advisers are writing over 60% of mortgages in New Zealand, which means they have small-to-medium business customers in front of them every day.”

Merry Christmas to the advice industry

Avanti Finance has a small team working through the Christmas period (excluding public holidays) and Boyce said that caveat loans and top-ups are able to be processed and settled.

The non-bank lender wishes the mortgage and finance industry a “wonderful Christmas and New Year”.

“On a personal note, I would like to thank the adviser community for all the support they’ve given to Avanti Finance over the past year, and we look forward to an even closer relationship next year,” Boyce said.

First Mortgage Trust, Pepper Money and Prospa also thank mortgage advisers, partners and the wider industry for their support, urging advisers to “switch off”, “relax and recharge” and “fill their own cup”.

Looking ahead to 2024

Heading into 2024, the mortgage and finance industry is looking forward to an expected increase in  confidence following the change in government.

Inflation is declining and interest rates look to have reached or be near the peak. While the Reserve Bank indicated in November that a further rise in the official cash rate may be necessary, some economists are forecasting that, at 5.5%, the peak has now been reached.

Interest rate cuts look to be a while off, ASB economists expecting the first official cash rate cut in August 2024.  Wholesale funding costs, which increased over September and October quarter, have now started to ease, alleviating pressure on fixed mortgage rates.

Dench said that early signs of a little bit of interest rate relief on the horizon should give mortgage advisers more confidence about the year ahead.

“Financial Advice NZ will be undertaking constructive and deliberate engagement with government officials, banks, other lenders and the regulator to get the settings for CCCFA and CoFI right for the lender, the adviser and the consumer,” he said.

Do you have a Christmas message to share with the mortgage industry? Share your thoughts in the comments section below.