In a move to expand its market share among low deposit borrowers, state-owned Kiwibank announced it would remove an interest rate premium for borrowers with less than a 20% deposit. (Corrected to make clear Kiwibank always lent to low deposit lenders, but that the interest rate premium for 80% plus LVR (loan to value) lending has been removed for its two year mortgage)(Updated with details on mortgage insurance and QBE) Effective from Monday morning, the move may bolster Kiwibank's share of the mortgage lending market, with many now saying the slump in New Zealand's housing market has bottomed out before the traditional spring buying season. In the last quarter of 2008, Kiwibank grew its mortgage market share by more than any other bank. Kiwibank cut a condition it had on its two-year home loan rates that an extra 0.2% would be added to the rate if the customer did not have at least 20% of the value of the property provided as security. Kiwibank's 6.09% rate for a two year mortgage is currently the second lowest out of the banks, beaten only by TSB's 5.99% which has a maximum 75% LVR. Kiwibank's move follows Westpac's decision last month to ease its lending threshold to 90% from 80%. Kiwibank charges a insurance fee for 80%-plus home lending that can amount to thousands of dollars. Kiwibank buys insurance from Australia's QBE, which was PMI, so that if the lender defaults the insurer will pay out. Kiwibank imposed the premium interest rate for 80% plus lending about a year ago. Kiwibank's home loan rates will remain unchanged. All mortgage rates are here.
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