Highest bidder gets the loan

By SIMON HENDERY

BankDirect is trying a novel way of signing up new home loan customers - through an online mortgage tender.

The "virtual bank" has $3 million on offer, to be lent to the highest bidders during a six-day tender round.

Bids for between $150,000 and $1 million, on a 12-month fixed-term mortgage, can be lodged through the bank's website from tomorrow.

Bidders will have to offer at least the reserve interest rate of 6.95 per cent. BankDirect's standard fixed 12-month mortgage rate is 7.75 per cent.

BankDirect said that if there were sufficient interest, it would consider repeating the tender.

Cynthia Brophy, a spokeswoman for the National Bank, described the tender as a marketing ploy.

"Banks are quite keen to do deals," she said. "It's really no different than what a number of competitors in the industry are doing, although in a slightly different way."

Jane Anderson, of WestpacTrust, said $3 million was "a drop in the ocean" as far as the mortgage market was concerned.

"New Zealand banks lend millions and millions of dollars. It's the sort of loan you would do in a busy branch in a couple of days. I wouldn't describe it as generous."

A spokesman for the ANZ said the bank was developing its online presence and while it did not have plans to run a similar tender, it would follow the trial with interest.

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