NZF moves from LMI to LEM

If there were no difference in cost to the borrower, this looks like a "six of one, half a dozen of the other" proposition which would make little practical difference.

NZF chief operating officer Adrienne Smith says comparing costs of the new LEM system, under which all borrowers pay the same, with the LMI premiums formerly charged is far from simple.

"LMI premiums vary widely, depending on the borrower's circumstances, and can range from 0.5% right up to nearly 4%," Smith says. In some cases the new LEM system will cost more than paying an LMI premium and in other cases less.

Using LEM, all NZF's borrowers with loan-to-value ratios (LVRs) over 80% and up to 85% pay an 0.5% margin over the carded interest rate, those with LVRs between 85% and 90% pay a 1% margin and those over 90% up to 95% pay a 1.5% margin.