GE Money has announced it will will close its Wizard Home Loans operation in New Zealand after it failed to find a buyer amid the depressed home lending market here and high funding costs. It will now focus on its personal loan, store cards and insurance businesses.
The announcement further reduces the choice and availability of home loans here, putting more pressure on the housing market despite falling interest rates. This is another piece of fallout from the Credit Crunch and reinforces the extent of the de-leveraging sweeping the world's property markets. Credit rationing is now a more important force than lower interest rates.
GE Money would continue to service all existing loans and would stop writing new business at a date to be agreed with franchisees. There remains a possibility the franchisees could reform under a new brand with a new funding source.
"The extreme volatility and greatly increased cost of funds, coupled with the New Zealand mortgage market conditions mean the Wizard business is no longer viable," said GE Money Australia and NZ CEO Mike Cutter.
GE Money said the decision was taken reluctantly and was no reflection on the contribution of the management and staff who had shown great loyalty.
The decision also had no bearing on the Wizard review in Australia.
"GE Money will now be able to better focus on those parts of the business that are its core strengths -- retail store finance, cards, personal loans and insurance sold through our retail partners, branches and online direct channels," Cutter said.
GE pulled out of the car lending market in New Zealand earlier this year after struggling to get new funding.
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