BY Sandy Milne 30 June 2021
Ahead of the inaugural Women in Mortgage and Finance New Zealand event, NZ Adviser talks to presenters Paulette Trotter and Eugene Bartsaikin.
When New Zealand clinched fourth spot in this year’s UN Global Gender Pay Gap Report, the results may well have left many Kiwis in the mortgage and finance sector puzzled.
As in many other countries around the world, the New Zealand financial services sector is typically stereotyped as pale, male and stale – and there’s a reason for that. In 2019, the NZ Herald reported a pay gap of 23.7% within the sector, and that’s to say nothing of under-representation at senior levels, or across the workforce more broadly.
Policymakers are split on how to address the issue, though Loan Market’s Paulette Trotter says women have an important role to play in changing the industry from the inside. “Women need to have confidence to stand up and expect the same pay as men,” she says. “They need to understand they are just as good as men and should expect to be paid the same.”
Trotter is one of many women who will meet at the inaugural Women in Mortgage and Finance New Zealand event on 29 July to tackle this age-old problem, as well as the broader challenges faced by the industry. And, in her case, she says engagement with her team and clients has ensured her success, despite systemic adversity.
“Work hard, have the right support team behind you, and provide amazing service with the goal of making buying a home as stress-free as possible,” she says.
How can brokers prepare for mortgage rate changes in 2021?
Trotter says mortgage professionals need to “ensure they are aware of what is happening”. That means listening to all official cash rate (OCR) reviews, reading commentary from reputable economists and providing feedback to their customers based on the knowledge they have at hand.
Eugene Bartsaikin, Loan Market’s managing director, adds that the current low interest rate environment won’t last forever. “The uncertainty is starting to lift,” he says, “with the RBNZ Governor Adrian Orr now signalling a gradual increase in the OCR subject to economic performance.”
“Whether it’s best for the client to fix for a short-term rate or a long-term rate is up to the mortgage adviser to gauge the risk profile with their client. However, it’s without a doubt wise to expect interest rates to not be this low for an extended period of time.”
According to Bartsaikin, some of the techniques available to advisers to mitigate risk include:
- setting repayments based on a proportion of the client’s income – rather than minimum repayments – to avoid nasty shocks when interest rates rise. “This will depend on the client’s income,” he says, “but on average a range of 30–40% is manageable as far as payments go”
- planning for the worst: scouting for the most expensive interest rate (currently 3.39%) and then backtracking using interest rate averaging techniques to fix portions of the loan to shorter and cheaper rates
- making sure investors, in particular, have adequate cash buffers and have accounted for market variability
Choosing the right type of mortgage for your client
Settling on a product for your client is no small feat. Although fixed rates almost always beat floating rates in New Zealand, the conversation should always start with a needs assessment. “When choosing a bank, we like lenders that offer offset loans and redraw facilities for owner-occupied lending,” says Bartsaikin, who believes these to be great tools when paired with the above risk-mitigation techniques.
But that doesn’t mean they’re right for every borrower; most households, he says, are “spenders, not savers”. So, when offered the choice between voluntary savings and mandated savings (via increased fixed repayments), Bartsaikin says it can be in a client’s interest to choose the latter.
“Having said that, if the client has a good savings record and manages their money well, these products could work,” he says. “These are also great for self-employed or commissioned borrowers as they need to set aside larger contingency funds.”
Is now a good time to refinance?
Like nearly all decisions made in the mortgage sphere, there’s rarely a neat yes-or-no answer to the question of refinancing; instead, it turns on the needs assessment and the strategic value it offers to the client. While refinancing may have been more attractive in the past, there’s now more value in maintaining an established banking relationship.
“Whenever we focus on what’s best for the client’s goals, new business is created long-term,” says Bartsaikin, “so the vast majority of our firm’s settlements are new purchases, with only a handful of refinances.”
“I would love to see bank commission models change to closely emulate the likes of BNZ, Westpac, Resimac, Bluestone,” says Bartsaikin, “as that allows an adviser business to grow on the basis of assets under management rather than new lending.
“Trail also gives a predictable income to hire support staff and salaried advisers to offer continuous service to clients without the need to try to find ways to add marginal value such as a refinance.”
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