The banking industry today launched an online calculator that allows consumers to compare up to three home loan offers. This initiative responds to a recommendation in the Commerce Commission’s market study into personal banking services.
The home loan calculator is hosted by Interest.co.nz and is available here: https://www.interest.co.nz/calculators/home-loan-comparison-calculator
The calculator will allow prospective borrowers to compare costs and incentives included in each offer to provide an estimated effective interest rate per annum. The effective interest rate is what the borrower pays after taking into account any cashback and other benefits offered by the lender, along with loan fees and any other costs.
New Zealand Banking Association chief executive Roger Beaumont says: “We are delighted to launch the calculator in association with Interest. Our banks compete strongly in the home loan market, and we support providing borrowers with clear information to help make one of the most important financial decisions of their lives.
“We’ve tried to keep the calculator as user-friendly as possible. We hope uptake is strong and that users find it helpful.”
The calculator’s development and ongoing maintenance is funded by members of the New Zealand Banking Association.
ENDS
Note
The home loan calculator responds to recommendation 10 of the Commerce Commission’s market study into personal banking services:
10. Home loan providers should present offers in a readily comparable manner, accounting specifically for the effective value of cash contributions. Industry should create a standard means of comparing home loan offers across all providers such as through a single effective interest rate that incorporates the effect of cash contributions over the clawback period to help consumers compare the cost of different loan offers.
Banking Association Chief Executive Roger Beaumont said the announcement was a step in the right direction, and it was currently working with its 17 members to develop a response to the proposals.
“The committee has carried out a thorough investigation of consumer and rural banking in New Zealand today. The focus on regulatory barriers to increased competition, and what regulators can do to improve that, is especially good to see,” New Zealand Banking Association chief executive Roger Beaumont.
Banking Association chief executive Roger Beaumont told a select committee earlier this month that any lender making any mistake, such as “getting a phone number wrong”, could be subject to draconian penalties that went far beyond compensating borrowers for their actual losses.
New Zealand Banking Association chief executive Roger Beaumont said banks are responsible lenders. They typically have dedicated teams to deal with those experiencing financial difficulty and mortgagee sales were “rare and always a last resort”.
Roger Beaumont, CEO of the New Zealand Banking Association, defended the proposed amendment: “Between 2015 and 2019, any lender who even made a small mistake… could be subject to a draconian provision in the law.”
“That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer who was happily enjoying their new home or car thanks to a bank loan.”
Financial Markets Authority (more…)
Financial Markets Authority (more…)
The New Zealand Banking Association has welcomed the amendment Bill, saying it tidies up the existing legislation to ensure that all breaches are treated the same as those currently.