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Resilient borrowers set to bounce back
It’s been a tough market for lenders and advisers, but there are signs that momentum is starting to shift, and non-banks Avanti and First Mortgage Trust are positive that brighter times are just ahead
Ian Boyce
Avanti Finance
Industry experts
Sam Burgess
First Mortgage Trust
Ian Boyce joined Avanti Finance in November 2022 as general manager property. He brings to the business over 30 years of senior leadership experience in financial services, banking and insurance.
Avanti Finance
Ian Boyce
Sam Burgess is head of lending at First Mortgage Trust. He has over 17 years of experience in the banking industry and has held roles across the property finance, private banking and commercial and business banking sectors.
First Mortgage Trust
Sam Burgess
“There’s a reason why more and more customers are going to advisers, rather than going direct with the banks – it’s the service they provide and their commitment to those customers”
Ian Boyce, Avanti Finance
KIWI BORROWERS have drawn on their resilience, adaptability and money management skills when coping with a challenging economic environment in 2023.
These customers and by extension the mortgage and finance industry have been hit by high interest rates, a higher cost of living, declining property values and squeezed borrower affordability.
Both lenders and mortgage advisers have had to adjust to a difficult market affected by declining loan activity, but also to reach out and assist those customers that are doing it rough.
But green shoots are starting to appear, both in the property market and the lending sector, with a change in government and a forecast end to the interest rate hiking cycle expected to bring increased momentum.
Non-bank lenders are expected to play a key role in servicing the upswing in finance demand, providing flexible loan options for advisers and their clients. To gain some insights from executives in the sector, including on the demand for lending, opportunities for advisers, and what will be the biggest influences and outcomes in 2024, NZ Adviser spoke to Avanti Finance general manager property Ian Boyce and First Mortgage Trust head of lending Sam Burgess.
“Increasing stability in the property market, combined with more certainty about interest rates, should lead to greater confidence and thus more demand from borrowers … our expectation is one of growth in 2024”
Sam Burgess, First Mortgage Trust
Given “everything that has happened to customers”, Avanti has seen their resilience, Boyce says.
“Certainly, interest rates are up, but customers have done a great job of managing these increases … we found that customers don’t take on debt they can’t afford.
“We’ve been very pleased that with the lending standards we have, the appetite of our customers and the way they cut their cloth accordingly has proven to be a real strength.”
Boyce says that in a difficult market over the last 18 months, with interest rates going up by about 500 points, customer resilience has been a “real positive”.
Burgess has also been impressed by how the industry has responded to a challenging operating environment.
“If you took me back in time and told me that property prices were going to drop by 20% and we were going to get caught in the most aggressive interest rate market that any of us had ever seen, I probably would have painted a pretty bleak picture at that point,” he says.
As more lenders enter the market, the reliance on advisers becomes greater and greater, Burgess says.
“No borrower has the time and energy available to them to understand all the various products and offerings in the market. There’s no secret sauce, in my view. Those advisers that stay close to the lending market and understand the appetite of the various providers will continue to attract and retain customers.”
Boyce says advisers have done an amazing job of assisting customers this year, and they “should do more of the same” in 2024.
Avanti Finance’s actions are dictated by what happens in the market, Boyce says.
“If the market grows, and I think it will, you talked before about green shoots – we’re starting to see more and more of that. We’re well placed to take advantage [of that growth].”
Boyce expects to see plenty happening in the technology space. “How can we be more efficient in providing a service to our advisers and their customers? We’re working hard on those things.”
Avanti is focused on maintaining its presence in the market, “having the right conversations and being there to support advisers and customers as they need us”.
“We all can share in a much bigger market. We’ve all suffered a little bit from a very constrained market, so we’re ready to support [advisers and customers] and look forward to really, really strong growth.”
Looking back at the past year, Burgess says real estate volumes retreated through the back end of the cycle.
“We have seen that refinance activity remain throughout, driven in part I guess by the reluctance or the policy settings of the main banks – so that’s acted as a positive for us,” he says.
“At this point, First Mortgage Trust is shaping up for a very good calendar year. Without compromising the quality of our book, we have been able to finance well over half a billion dollars’ worth of lending and help many borrowers achieve their financial goals.”
At Avanti Finance, which offers personal, car and debt consolidation loans as well as home loans, the mortgage market has been quite subdued this year due to low demand, Boyce says.
“I think it’s [been] 40-year lows in terms of sales. We’ve seen rapidly increasing interest rates and a cost of living crisis – that’s had a real impact on our customers,” he says. “We’ve done pretty well despite that, but certainly not at the levels we were seeing before.”
“There’s a reason why more and more customers are going to advisers, rather than going direct with the banks,” he says. “It’s the service they provide and their commitment to those customers, and over the most recent period, a lot of the work that they’re doing has been without reward.”
He says advisers have been conducting loan reviews for customers, helping them get set up for future opportunities or helping them cope on their existing budgets.
“I think the proactivity advisers have been displaying will stand them in good stead going forward.”
What’s really been in Avanti Finance’s favour is the fact that the non-bank is a diversified business.
“While the property market has been a bit subdued, we’ve done very well with our motor vehicle financing based both here and in Australia,” Boyce says.
“Also, our consumer lending has gone quite well. So we’re very lucky that when one part of the business is quiet, the other has been quite successful. We’ve got a very nice balance there.”
“But the reality has been somewhat different, and I guess with a bit of mahi [work], and a few creaks and groans on the way through, the finance industry has continued to function very well.”
Burgess says the industry has allowed quality borrowers to continue to finance their opportunities and goals. “I have little doubt that advisers have had to work harder for their customers over recent times, and that’s to be commended as well.”
Read on
Burgess says “increasing stability in the property market, combined with more certainty around interest rates, should lead to greater confidence and thus more demand from borrowers”.
“We expect to see lending demand complemented by more aggression from both non-bank and main bank providers in 2024.
“For us at FMT, it’s about embracing the market and remaining responsive to it. Our expectation is one of growth in 2024, and that’s what we’re looking forward to at the moment.”
Higher interest rates mean a higher cost of funds, says Boyce, which customers have to bear. Non-bank lenders such as Avanti Finance need to have the right conversations with customers and ensure they are offered the right products and the right structure.
“There’s confidence that interest rates are at their peak,” he says. “I think that will also help people make some investment and buying decisions that they’ve been holding off on. The scare factor that things will keep going up has really dissipated.”
Burgess says that for the most part, “people have made their peace with higher interest rates”.
Avanti Finance has been working with introducers, advisers and brokers to provide flexible options for over 30 years, helping thousands of New Zealanders get into new homes, buy new cars, start new businesses or consolidate their debt. In an industry in which box-ticking is the norm, Avanti Finance does things differently. It looks at the context and background of the borrower, not just the borrowing, because it knows that sometimes 'life happens'. Talk to Avanti today about its broad range of lending products, including long-term first mortgages, caveat loans, bridging loans, car loans, business loans and personal loans. We’d love to help.
Find out more
First Mortgage Trust (FMT) is an investment fund manager specialising in investments and property finance. Since 1996, FMT has been helping New Zealanders protect and grow their wealth by providing consistent investment returns. Today, it has over $1.65 billion in funds under management and more than 6,500 investors nationwide. FMT also provides clients with tailored property finance through first mortgages across the residential, commercial, industrial and retail property sectors in New Zealand.
FMT has offices in Auckland, Tauranga, Wellington and Christchurch with over 60 staff members and is continuing to grow to meet market demand.
Find out more
Resilient borrowers set to bounce back
It’s been a tough market for lenders and advisers, but there are signs that momentum is starting to shift, and non-banks Avanti and First Mortgage Trust are positive that brighter times are just ahead
Read on
Sam Burgess
First Mortgage Trust
Ian Boyce
Avanti Finance
Industry experts
KIWI BORROWERS have drawn on their resilience, adaptability and money management skills when coping with a challenging economic environment in 2023.
These customers and by extension the mortgage and finance industry have been hit by high interest rates, a higher cost of living, declining property values and squeezed borrower affordability.
Both lenders and mortgage advisers have had to adjust to a difficult market affected by declining loan activity, but also to reach out and assist those customers that are doing it rough.
But green shoots are starting to appear, both in the property market and the lending sector, with a change in government and a forecast end to the interest rate hiking cycle expected to bring increased momentum.
Non-bank lenders are expected to play a key role in servicing the upswing in finance demand, providing flexible loan options for advisers and their clients. To gain some insights from executives in the sector, including on the demand for lending, opportunities for advisers, and what will be the biggest influences and outcomes in 2024, NZ Adviser spoke to Avanti Finance general manager property Ian Boyce and First Mortgage Trust head of lending Sam Burgess.
What’s really been in Avanti Finance’s favour is the fact that the non-bank is a diversified business.
“While the property market has been a bit subdued, we’ve done very well with our motor vehicle financing based both here and in Australia,” Boyce says.
“Also, our consumer lending has gone quite well. So we’re very lucky that when one part of the business is quiet, the other has been quite successful. We’ve got a very nice balance there.”
Looking back at the past year, Burgess says real estate volumes retreated through the back end of the cycle.
“We have seen that refinance activity remain throughout, driven in part I guess by the reluctance or the policy settings of the main banks – so that’s acted as a positive for us,” he says.
“At this point, First Mortgage Trust is shaping up for a very good calendar year. Without compromising the quality of our book, we have been able to finance well over half a billion dollars’ worth of lending and help many borrowers achieve their financial goals.”
At Avanti Finance, which offers personal, car and debt consolidation loans as well as home loans, the mortgage market has been quite subdued this year due to low demand, Boyce says.
“I think it’s [been] 40-year lows in terms of sales. We’ve seen rapidly increasing interest rates and a cost of living crisis – that’s had a real impact on our customers,” he says. “We’ve done pretty well despite that, but certainly not at the levels we were seeing before.”
Given “everything that has happened to customers”, Avanti has seen their resilience, Boyce says.
“Certainly, interest rates are up, but customers have done a great job of managing these increases … we found that customers don’t take on debt they can’t afford.
“We’ve been very pleased that with the lending standards we have, the appetite of our customers and the way they cut their cloth accordingly has proven to be a real strength.”
Boyce says that in a difficult market over the last 18 months, with interest rates going up by about 500 points, customer resilience has been a “real positive”.
Burgess has also been impressed by how the industry has responded to a challenging operating environment.
“If you took me back in time and told me that property prices were going to drop by 20% and we were going to get caught in the most aggressive interest rate market that any of us had ever seen, I probably would have painted a pretty bleak picture at that point,” he says.
“But the reality has been somewhat different, and I guess with a bit of mahi [work], and a few creaks and groans on the way through, the finance industry has continued to function very well.”
Burgess says the industry has allowed quality borrowers to continue to finance their opportunities and goals. “I have little doubt that advisers have had to work harder for their customers over recent times, and that’s to be commended as well.”
Ian Boyce joined Avanti Finance in November 2022 as general manager property. He brings to the business over 30 years of senior leadership experience in financial services, banking and insurance.
Avanti Finance
Ian Boyce
Sam Burgess is head of lending at First Mortgage Trust. He has over 17 years of experience in the banking industry and has held roles across the property finance, private banking and commercial and business banking sectors.
First Mortgage Trust
Sam Burgess
Resilient borrowers set to bounce back
It’s been a tough market for lenders and advisers, but there are signs that momentum is starting to shift, and non-banks Avanti and First Mortgage Trust are positive that brighter times are just ahead
Read on
Sam Burgess
First Mortgage Trust
Ian Boyce
Avanti Finance
Industry experts
KIWI BORROWERS have drawn on their resilience, adaptability and money management skills when coping with a challenging economic environment in 2023.
These customers and by extension the mortgage and finance industry have been hit by high interest rates, a higher cost of living, declining property values and squeezed borrower affordability.
Both lenders and mortgage advisers have had to adjust to a difficult market affected by declining loan activity, but also to reach out and assist those customers that are doing it rough.
But green shoots are starting to appear, both in the property market and the lending sector, with a change in government and a forecast end to the interest rate hiking cycle expected to bring increased momentum.
Non-bank lenders are expected to play a key role in servicing the upswing in finance demand, providing flexible loan options for advisers and their clients. To gain some insights from executives in the sector, including on the demand for lending, opportunities for advisers, and what will be the biggest influences and outcomes in 2024, NZ Adviser spoke to Avanti Finance general manager property Ian Boyce and First Mortgage Trust head of lending Sam Burgess.
What’s really been in Avanti Finance’s favour is the fact that the non-bank is a diversified business.
“While the property market has been a bit subdued, we’ve done very well with our motor vehicle financing based both here and in Australia,” Boyce says.
“Also, our consumer lending has gone quite well. So we’re very lucky that when one part of the business is quiet, the other has been quite successful. We’ve got a very nice balance there.”
Looking back at the past year, Burgess says real estate volumes retreated through the back end of the cycle.
“We have seen that refinance activity remain throughout, driven in part I guess by the reluctance or the policy settings of the main banks – so that’s acted as a positive for us,” he says.
“At this point, First Mortgage Trust is shaping up for a very good calendar year. Without compromising the quality of our book, we have been able to finance well over half a billion dollars’ worth of lending and help many borrowers achieve their financial goals.”
At Avanti Finance, which offers personal, car and debt consolidation loans as well as home loans, the mortgage market has been quite subdued this year due to low demand, Boyce says.
“I think it’s [been] 40-year lows in terms of sales. We’ve seen rapidly increasing interest rates and a cost of living crisis – that’s had a real impact on our customers,” he says. “We’ve done pretty well despite that, but certainly not at the levels we were seeing before.”
Sam Burgess is head of lending at First Mortgage Trust. He has over 17 years of experience in the banking industry and has held roles across the property finance, private banking and commercial and business banking sectors.
First Mortgage Trust
Sam Burgess
Ian Boyce joined Avanti Finance in November 2022 as general manager property. He brings to the business over 30 years of senior leadership experience in financial services, banking and insurance.
Avanti Finance
Ian Boyce
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Lending demand in 2023
Published 20 Nov 2023
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MORTGAGE INDUSTRY
BEST IN MORTGAGE
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TV
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US
CA
AU
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Copyright © 1996-2023 KM Business Information NZ
Companies
People
Newsletter
About us
Authors
Privacy Policy
Conditions of Use
Terms & Conditions
Contact Us
Sitemap
RSS
News
MORTGAGE INDUSTRY
BEST IN MORTGAGE
SPECIALTY
TV
Resources
US
CA
AU
NZ
UK
Copyright © 1996-2023 KM Business Information NZ
Companies
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Newsletter
About us
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Terms & Conditions
Contact Us
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Sept
2021
May
2023
June
2023
July
2023
Aug
2023
Sept
2023
All borrower types
First home buyers
Other
owner-occupiers
Investors
Business purposes
Source: Reserve Bank of New Zealand
Value of new residential mortgage lending by borrower type ($m)
6,934
1,173
4,453
1,232
77
55
809
3,207
1,064
5,135
Sept
2022
85
990
3,362
1,422
5,859
74
939
3,288
1,385
5,686
64
854
2,842
1,238
4,997
88
986
3,340
1,368
5,782
82
894
2,965
1,253
5,194
Despite challenges of 2023, there have been positives
How advisers can prepare for 2024
Key influences on non-bank lending in 2024
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2,000
1,000
2023
2022
2021
2020
2019
2018
2017
Property purchases
Top-ups
Changes in loan provider
Other
Value of new residential mortgages by purpose ($m)
Source: Reserve Bank of New Zealand
Interest rates and funding costs
“We were always going to have to take some medicine after a period of historically low interest rates, and that has turned out to be the case,” he says.
“But it’s not all about interest rates – it’s just as much around the predictability of the interest rates. As we move through the end of the tightening cycle, people can look forward with more certainty and make decisions with more confidence.”
Previous years
MONTHLY
Despite challenges of 2023, there have been positives