Banks' new comparison calculator no threat to advisers: Patten

The calculator, whose development and ongoing maintenance is funded by members of the NZBA, allows prospective borrowers to compare the offers, including any incentives such as cashbacks and other benefits, of up to three loan offers.

One reason why prospective borrowers seek the advice and assistance of mortgage advisers is because it's so difficult to understand the myriad of different mortgage offers available in the market and to work out which offer best suits an individual borrower's circumstances.

Based on the data three of the major banks and Kiwibank disclose, advisers now originate well over 50% of mortgages and that number is expected to grow – advisers in Australia now originate about 70% of mortgages.

“It's just another tool,” Patten says. “I don't see it reducing any advice from advisers. Most clients want personalised advice.”

NZBA says developing the calculator is the banking industry's response to one of the Commerce Commission's recommendations after it completed its market study of personal banking services last year.

ComCom recommended that home loan providers should present offers “in a readily comparable manner, accounting specifically for the effective value of cash contributions,” and that the industry should create a standard means of comparing offers across all providers.

NZBA says the calculator does take into account any cashback and other benefits as well as the impact of loan fees and any other costs.

“Our banks compete strongly in the home loan market and we support providing borrowers with clear information to help make one of the most important financial decisions of their lives,” says NZBA chief executive Roger Beaumont.

“We've tried to keep the calculator as user-friendly as possible. We hope uptake is strong and that users find it helpful.”

Patten says his business often does comparisons for clients when comparing lenders.

“The main thing is that comparisons are only a point in time and can change from day to day,” he says.

“It's as much about how much you pay on the loan, as anything to pay the loan off faster, as it is what rate you get or how much cash you get.”

The banks individually offer their own calculators and Patten cites the example of a client he helped recently with a mortgage from Westpac.

“To assist them, I used Westpac's offset calculator to show the client how much they would save,” he says. He's likely to use the new comparison calculator in a similar manner, Patten says.