ANZ NZ CEO Antonia Watson says the housing market's 'especially competitive' at the moment, at least in part due to low volumes of new loans

With ANZ New Zealand currently allowing customers with small deposits to apply to have low equity premiums/fees on home loans waived, CEO Antonia Watson says the bank's always looking to grow its share of the home loan market.

Speaking to interest.co.nz on Friday after ANZ NZ posted its annual financial results, Watson described waiving low equity premiums as "competition in action," against the backdrop of the Commission Commission's market study concluding the personal banking sector is dominated by a stable oligopoly of ANZ NZ, ASB, BNZ and Westpac NZ who don't face strong competition.

"We're always looking to grow market share. The market is especially competitive at the moment. And I think one of the reasons for that is that there's less flow. So there's a smaller base and everyone wants to grow their balance sheet, so everyone is fiercely competing," Watson said.

She said something the Commerce Commission and parliamentary banking competition inquiries miss a bit is that competition in banking isn't just on price. It can also be on whether someone can get a loan in the first place.

"How much will you lend me? How quickly can you turn around a decision? So if you think back a couple of years ago, remember when the market was really, really hot, the biggest thing we were competing on was turnaround times. How quickly could we tell the customer that we would actually be able to lend them money, given that there was so much work going on and there were so many applications pouring in," Watson said.

Watson didn't have numbers to hand in terms of how many customers were having the fees waived. She said ANZ NZ was "not especially" targeting people with small deposits at the moment, despite offering the waiver on low equity premiums.

"One of the things is that if you have under a 20% deposit, you will also tend to pay a higher [interest] rate. So we're saying, we will give you the relief of the low equity premium, but they still attract a lot more capital and they're more risky loans and therefore you tend to see a higher interest rate."

Watson said ANZ NZ is also offering borrowers' cashbacks.

ANZ NZ says a low equity premium, or fee, may apply where a loan amounts to more than 80% of the property's value. The bank requires a registered valuer's report for lending over 80% of the property's value. ANZ NZ's standard low equity fees are;

For an 80.01% to 85.00% loan to value ratio – 0.25% of the loan amount.
For an 85.01% to 90.00% loan to value ratio – 0.75% of the loan amount.
And for a loan-to-value ratio over 90.01% – 2.00% of the loan amount.

Figures released in parent the ANZ Banking Group's annual results show ANZ NZ's share of the home loan market unchanged at September 30 year-on-year at 30.4%. It grew home lending $4 billion over the year to $111 billion, lifting it to 73% of total lending, up from 72% a year earlier.