$2 million milestone for Community Finance programme

The Community Finance partnership is proud to announce today the low and no interest loans programme has now provided access to $2 million of lending for financially excludedKiwi families who may otherwise go to predatory lenders.

Community Finance provides access to a fair and affordable borrowing option around the country.

“The $2 million lending represents 825 families who are struggling to live on limited incomes. The support we’ve provided to so many families is a milestone to celebrate,” said Chief Executive of Good Shepherd New Zealand Fleur Howard.

“The conversations that happen as a part of the loan process help strengthen people’s financial understanding and the loans increase the wellbeing of families and communities by enabling change. For example, a reliable car for many of our clients is what they need to hold down a full-time job; a computer can help with further education,” she said.

“People grow in confidence and learn how to look at their budget critically. Perhaps they get a loan or sometimes they go away and sort out some of their debt then return to us for a loan when they’re in a better financial position,” she said.

Frances Ronowicz, Head of Community Finance at BNZ, which provides the lending, said: “We estimate that the $2 million of lending has saved clients more than $1.103 million in interest and charges when compared to borrowing the same amount through predatory lenders.

“The programme addresses a very real need in our community and BNZ is proud to be a part of saving people so much interest. We recognise that by connecting with our community loan workers, people learn life skills like managing their budget better and they become more aware of the impact of borrowing from high-cost lenders,” she said.

“Since the launch of the pilot in August 2014 to March 2017, the Community Finance programme lent $1 million. The nationwide scale-up for the programme, funded by the Government through its 2016 budget allocation for operating costs, meant we’ve quickly reached the $2-million mark,” she said.

“Community Finance loans help people when they’re facing tough times and financial challenges. While the lion’s share of the loans cover vehicles and vehicle repairs, it can also be the funeral expenses of a death in the family or emergency dental work,” she said.

New kids on the block: the changing face of property investors

Savvy first home buyers are becoming more creative in a bid to get on the property ladder, according to BNZ Financial Futures Research.

The findings reveal the idea of the Kiwi quarter acre dream is changing, with many people believing the more achievable path to ownership is through property investment.

The research challenges the traditional perception that property investment is only the domain of the wealthy few who can leverage equity in their home.

Paul Carter, BNZ’s Director of Retail and Marketing, says we’re seeing a shift in the traditional path to home ownership.  

“We asked people what they were prepared to do to get on the property ladder and 44% of first property buyers said they want to buy an investment property, either in a cheaper suburb of the city where they lived or elsewhere in the country,” he says.

“We all know that New Zealanders have a reputation for their ingenuity and they’re showing it again when it comes to looking at all kinds of creative alternatives to buy their first property.

“Other trends our research showed were 30% of buyers are considering joining up with family to make their property ownership ambitions come true and 14% say they’d buy with friends,” Mr Carter says.

He says the key for anyone considering options such as buying an investment property or shared ownership is to do their research so they’re setting it up right the first time.

“It’s a great option if people do their homework and crunch all of the numbers before they invest,” Mr Carter says.

“For example, potential investors need to understand the cashflow and return on investment after expenses from a rental property. As you adjust to the first year of property ownership, you need to ensure there’s a little income left over after paying the mortgage to cover the cost of the rates, repairs and maintenance,” he says.

With the enthusiasm evident for property investing, there are a number of other things that people need to consider, including loan-to-value ratio regulations. These rules were relaxed slightly at the beginning of the year, which means many potential investors may be able to look at buying that much sooner.

Current legislation means buyers usually need a 35% deposit for investment properties.

In the regions, such as Manawatu, the median property price is approximately $289,000[1]and the 35% deposit would be $101,150, around half of what you need for a median house deposit in Auckland.

Opportunities for those tied to New Zealand’s more expensive locations could be to invest in a smaller unit or an apartment in a cheaper suburb, or combine their savings and buy a shared property.

An important thing when considering buying a house in a non-traditional way is to seek advice – BNZ can help make the finances simple and you’ll need to consult other experts such as a lawyer. Some of the advice they may give you includes:

  • Draw up a property sharing or co-ownership agreement so you know what happens if one of you decides to sell.
  • Establish the implications for you if another person defaults on their payments.
  • Ensure you have an agreement on how to share the costs of ongoing bills, repairs and maintenance. 

In response to this research, BNZ is piloting a new event for people looking at alternative ways to get into the property market.

“Our ‘Buying outside the Box’ event is a chance to hear the experiences of those who’ve had less than ‘traditional’ paths to home ownership.

“After that, guests will get expert advice on what to do (and what not to do) from our specialists on design and renovation, the legal elements and of course our finance experts from BNZ,” says Mr Carter.

People interested in registering to attend the Auckland event can visit https://www.begoodwithmoney.co.nz/personal-banking/owning-a-home/buying-outside-the-box

Backing bold women: Scholarships announced

by BNZ CEO, Angie Mentis

International Women’s Day gives us the opportunity to not simply talk about gender equality, but to act on it too.

This year is 125 years since New Zealand women got the right to vote. Given that fact, it is simply not acceptable that experts are estimating that gender parity another 186 years away. That’s six generations.

Today we have the chance to act. Forget the year 2186 for gender equity. Think 2020. That’s our commitment. BNZ will achieve gender equality across all levels of our organisation by 2020. Continue reading “Backing bold women: Scholarships announced”