Wednesday 13th August 2003
|Text too small?|
"The market has moved on. The Model A was a great car in its day."
Another reason is that the profit margins available on contributory mortgages have been fiercely squeezed of late and sourcing funds from the Australian wholesalers provides better margins, Cairns says.
The Australian wholesalers are also more flexible sources of funds. And then there are communication needs: "It's an awful lot easier dealing with one wholesale fund than having to deal with maybe 50 different contributors," he says.
"We also found that, in an extremely intense residential market, we had plenty of contributors but it was getting harder and harder to find good mortgage proposals. The market's just so competitive."
Contributory mortgages have received a bad press after a number of high profile failures, most notably in the Reeves Moses contributory mortgage saga, and publicly announced investigations by the Securities Commission of many such schemes.
Last year, the former manager of the Reeves Moses Hudig contributory mortgage business, Peter van Nieuwkoop, was found guilty on a number of charges relating to four contributory mortgage schemes dating back to 1999.
Many operators have since withdrawn from offering such schemes.
But Cairns says the main reason contributory mortgages have run into problems is that their promoters were using them inappropriately.
"They're not suitable for developments or for land sub-divisions" and it's very hard to comply with the regulations governing contributory mortgages which are "very, very proscriptive," he says. Cairns Lockie only ever used the vehicle to fund residential mortgages.
"If you obey the law, they're all right," he says.
No comments yet
Transpower sees no risk to credit metrics from incentive change
NZ dollar rises, an outlier amid rising Gulf tensions
Craigmore spends $32M to expand Kerikeri kiwifruit crop by 'more than a third'
CentrePort eyes further hub expansion
South Port beats guidance, earnings in line with 2018 record
Plexure sees revenue growth from White Castle deal
22nd July 2019 Morning Report
NZ dollar treading water as markets focus on Iran
MARKET CLOSE: NZ shares extend gain as passive funds bolster prices; Tourism Holdings climbs
NZ dollar headed for 1.3% weekly gain on expectations of a Fed rate cut