KEY POINTS:
Wizard Home Loans, the non-bank mortgage lender once promoted by former All Black Grant Fox, is quitting the New Zealand market.
It will cease to offer any new mortgages but will continue to service 4000 existing customers with loans worth about $1 billion.
Wizard has 25 New Zealand branches which are owned and operated by local licensees. Spokesman Geoff Lynch estimated around 80 jobs would go as a result of the move.
This comes on top of 80 New Zealand job losses already announced by Wizard's parent, GE Money, in October.
At the time the finance company said it was pulling back from the Australasian home loan and car finance market because of the global financial crisis.
It said while it would not do any new lending through third parties, its Wizard network would continue to offer home loan products.
The news of the revised decision comes just a day after GE announced it was dropping interest rates for existing and new customers. The lender had been criticised for continuing to charge interest rates of around 10.25 per cent, despite the falling official cash rate.
GE has been seeking a buyer for Wizard since May. It paid A$500 million ($599 million) for the business four years ago.
In Australia yesterday, National Australia Bank said that it was "well advanced" in talks to buy Wizard's distribution network and A$4 billion of prime mortgages.
However on this side of the Tasman GE said it had reluctantly decided to shut down Wizard New Zealand because of the ongoing effects of the credit crisis and the state of the housing market here. "There just hasn't been a party that's come forward who wants to talk to us about the New Zealand business," Mr Lynch said.
Herald readers have complained of a range of unfriendly lending practices by GE, such as its high interest rates, lack of fixed rate options, and inflexibility on any changes to home loans such as top ups.
One victim of the Blue Chip property scheme collapse said he was still being charged 11.6 per cent interest on his GE mortgage and had had no rate reduction this year to date.
However the company has denied it's trying to encourage homeowners to find other lenders.
Some GE mortgage customers, such as those with Blue Chip-related loans, will struggle to refinance elsewhere because of lack of equity in their properties or less than desirable credit records.
Grant Fox, who at one point was part-owner of a Wizard branch and had an ongoing promotional contract with the company, said he hadn't been required to do any promotions "for quite some time".
He understood his services were no longer required.
GE has said because of its reliance on the wholesale money markets for funding - as opposed to depositors' funds - it has been much harder hit than banks by the financial crisis.
The finance company said it would concentrate on its "core strengths" in the New Zealand market - retail store finance, personal loans and insurance.
