Heartland leaves home loans to the banks
"We don't think the risk/return is there long term. We'll leave it to the big banks to slug it out between themselves.”.
Heartland's mortgage book fell by $68 million to $324 million in the year ended June, reflecting both mortgages amortising and customers taking advantage of very sharp interest rates offered by competitors to refinance.
“The mortgage market in New Zealand is very commoditised. By and large, it's no longer a relationship product.”
Instead, the primary driver of mortgage business now is price.
Greenslade says although Heartland will continue to provide mortgages as required, it favours replacing this low margin business with higher value motor vehicle loans which are “inherently high margin and low risk” and tend to perform as well as mortgages.
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