The lender’s decision will come as a blow to the non-bank finance sector which has seen the withdrawal of numerous companies over the past year.
GE, with its sister company AMS had been one of the main sources of funds for specialist lenders and mortgage brokers in New Zealand, particularly for borrowers who did not fit standard bank lending criteria.
Louise Ledger, of Global Home Loans and Moorhouse Mortgages, based in Christchurch said that GE represented half of her funding although only 10% of business over the last year as GE’s lending criteria had tightened considerably. She has other lines of funding open through Moorhouse Mortgages but would be seeking new funding sources.
She said that she had been informed about GE’s decision last Friday afternoon and was working this week to finalise applications to GE by today (Friday 31 October), the funder’s cut-off date for new business.
Fraser Cann of Whangarei-based Presto Mortgages said the GE move would affect the company’s prime and specialist products including its 100% and credit-impaired loans.
Presto would suffer a reduced revenue stream but was funded by two other active funders and remained in a strong position.
William Cairns of the Cairns Lockie group said that GE’s announcement had been unexpected. His group had three other sources of funds including its finance company which had applied for a guarantee under the Government’s deposit guarantee scheme. This could result in the finance company being an important source of funds next year but Cairns said that the non-bank sector of the finance market would continue to shrink.
Freedom Mortgages (formerly Resi Mortgage Corporation) also received funds from GE but general manager Laura Gregory said she was unable to comment until directors had met.
GE has said that trail commission will continue to be paid to mortgage brokers on loans already in place.
