Two advisers weigh in on the latest NZBA home loan comparison tool
The New Zealand Banking Association (NZBA) has unveiled an online calculator hosted on Interest.co.nz. It allows consumers to compare up to three home loan offers side by side, taking into account interest rates as well as cashbacks, fees, and incentives.
The calculator displays an “effective interest rate per annum,” which aims to give borrowers a clearer picture of the true cost of competing loan offers. The launch was a direct response to the Commerce Commission’s recommendation to implement clear, standardised comparisons across lenders.
For mortgage advisers, the emergence of more home loan tools is welcome – albeit, with caveats. Elyce Peters (pictured left), head adviser and founder at The Mortgage Girls, said that the introduction of more home loan tools is a “net positive”.
She noted that clients will often run numbers through a calculator first, and then come to an adviser to “sense check” and further tailor a plan.
“In our experience these tools start the journey, but they don’t finish it,” Peters told NZ Adviser.
“Calculators are great for narrowing options, but approval and structure hinge on policy, servicing, and risk settings that aren’t visible in a headline rate. Most people use a tool, then contact an adviser when they hit ‘Why doesn’t this rate apply to me?’ or ‘How should I split fixed terms?’ The tools increase engagement; advice provides context, feasibility, and strategy.”
Peters said that rate and cost tools won’t advise on things like servicing, the likelihood of approval, how to structure for life events, total-cost strategy over time, or other nuances.
Satyan Mehra (pictured right), director at iConsult, has also seen his fair share of clients finding information online before coming for advice. He said that a lot of online research won’t fit with how things work in New Zealand, and calculators won’t capture the full scope of a client’s situation.
“The big thing for me is that the tools are only as good as the user,” Mehra said.
“Often if clients are looking at offset loans, for example, they won’t 100% understand the product. Sometimes the products they look at don’t fit with their financial circumstances.
“Some clients are quite savvy, and they’ll come up with a good loan structure. But my general observation is that clients like us to help them with using those tools.”
He added that since adviser services are generally free, and advice is readily accessible. Comparison tools are therefore not likely to make a dent in adviser businesses anytime soon.
“They could also go and lodge an application directly with the bank, but they engage an adviser for convenience,” he said.
“They won’t want to spend their time on a Tuesday looking at comparison calculators, they want someone else to do it for them. And these tools are still fairly raw, it’s not that you can punch in your financial position and it’ll spit out a statement of advice.”
There is also the promise of comparison tools actually making things easier for advisers. Peters said The Mortgage Girls already uses a suite of calculators and resources for clients, and is constantly building them out. Mehra also uses calculators and comparison tools to demonstrate different scenarios to clients.
“If these tools get more sophisticated, if anything, it might even make our lives easier,” Mehra said.
