Kiwibank buys into NZ Home Loans

The move will boost Kiwibank's share of the mortgage market because it will take over funding NZHL's prime mortgages. That will deal a blow to Sovereign which previously provided the bulk of NZHL's funding.

The 10-year old NZHL currently has about $1.7 billion in mortgages funded by Sovereign. NZHL founder and chief executive John Erkkila, who will continue to run the company, says that will be close to $2 billion by the time Kiwibank takes over funding new loans from August 1.

Loans already written with Sovereign will remain in place and, as with the Sovereign-funded loans, all the Kiwibank-funded loans will be written under NZHL's brand.

Erkkila says it will probably take until the end of the year for all new loans to be Kiwibank-funded as new systems are rolled out across NZHL's 28 franchised offices.