Simplicity KiwiSaver Scheme offering low interest mortgages to first-time buyers

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Simplicity KiwiSaver Scheme is branching out with a low floating interest rate mortgage offer to all prospective first-time buyers, with an eye to offering other consumer finance products in the future.

The Government has canned the $1000 KiwiSaver kickstart programme.

The total size of KiwiSaver funds is expected to grow to $200 billion by 2030.
Photo: 123RF

The not-for-profit fund manager previously offered the 2.25 percent floating home loan rate only to existing Simplicity members who had been with the provider for one year.

However, Simplicity managing director Sam Stubbs said the offer was now open to every first-home buyer who switched to its KiwiSaver scheme – without any waiting period – given the rapid growth in funds under management.

The current size of total KiwiSaver funds under management by the industry was expected to grow to $200 billion by 2030 from about $76b.

“If you think about the very long-term nature of KiwiSaver savings, there’s going to be some very interesting products that I think KiwiSaver providers will provide, not necessarily us but probably including us, in areas like build-to-rent housing would be an interesting one, life insurance would be interesting again,” Stubbs said, adding there was a lot of room for price competition with the big banks.

Simplicity’s mortgage lending scheme benefited members, with a 2.25 percent return for mortgages, instead of earning 1 percent on a bank deposit, he said.

“Not only will first-home owners pay a much lower floating mortgage rate than any bank, our KiwiSaver fees are lower too,” Stubbs said.

He repeated previous criticism that the main banks were charging too much, with floating mortgages offered by banks ranging between 3.4 to 5 percent.

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