Assessors draw on specialist expertise
A New Zealand non-bank lender is steering clear of the cookie-cutter approach to lending, opting to understand the borrower and assess each application on individual merit.
Norfolk Trust provides short-term funding for a period of 12 months to two years. The loan purpose may be to fund a project, expand a business, or to provide options for an older borrower who does not meet standard bank criteria.
Loans are secured by first registered mortgages (for example, residential property) and are funded by investors, who are linked to the performance of the entire loan portfolio.
Norfolk Trust CEO Glenys Holden (pictured above) said the company was distinct from mainstream lenders because it took a case-by-case approach to each loan application it received.
Its tailored process includes obtaining a full understanding the borrower and the loan purpose before deciding whether an application is a good fit.
“We’re very relationship focused … we want our borrowers to do well and to succeed with what they’re wanting to do,” Holden said.
Established in 2006 by property and commercial lawyer Jack Porus (chairman), and Auckland lender Stu Smith (executive director), Norfolk Trust wants to work with borrowers and advisers who are happy with a personalised level of service.
“Obviously a loan has to meet certain criteria, however we assess every loan individually … there is no tick box exercise,” Holden said.
As CEO, Holden is involved in all aspects of the business, including talking to advisers and clients about new lending applications.
As a starting point, Norfolk Trust seeks to understand the property details for security. It’s service may then involve more in-depth questions about the borrower and the circumstances of the loan, which Holden said allows its credit assessors to accurately assess the risk.
“We find the people factor very important and consider the industry that they’re in, and whether their plans will work in the industry they operate in,” Holden said. “We’re interested in building a positive ongoing relationship … if we fit that’s great, and conversely, if it’s not a fit for us, we will let people know very quickly.”
For applicants wanting to subdivide, Norfolk Trust will generally look at the value of the bare land. It tends to adopt a conservative approach to value, up to a maximum of around 50%, Holden said.
“When we look at a proposal, we gain an overview … we want to see what they are trying to achieve, how realistic is it and what’s the exit plan,” Holden said.
Interest rate fixed at start of loan
Holden said that interest rates were set at the start of the loan and fixed for the loan term. This meant that official cash rate increases didn’t affect the rate payable during the lending period.
“We assess at the beginning of the loan, based on the interest rate we regard as appropriate for the risk and credit assessment,” Holden said.
Despite the rising rate environment, Holden said demand for credit remained steady, noting that borrowers were still wanting to make headway and complete their projects.
Four credit assessors provide expertise
Norfolk Trust has a team of four internal credit committee members who assess each application on its merit and seek to understand where Norfolk Trust fits and can add value in the process.
Holden said that four pairs of eyes looking at each application provided a thorough assessment process and enabled sharing of combined expertise – a benefit to advisers and their clients.
“When considering proposals, it really helps to have that personal viewpoint as to the property of the asset, and market commentary about what is being proposed,” Holden said. “We all approve every loan that we do … everyone in the business is involved in the process.”
Unlike the past few years, Holden said an increasing number of applicants wanted certainty around their plan, which included a clear understanding of the full cost involved.
