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Concerns are mounting that more finance companies will collapse as confidence crumbles in that sector.
"We are definitely in a state where we have a crisis of confidence," said John Grant, business director for Wizard Home loans. He predicted more collapses ahead.
When confidence evaporated, companies that lent long but borrowed short would always have problems, he said.
Christchurch-based Property Finance Group said on Friday it would have to restructure because it could not honour its debts due to the drying up of funds from investors and the wholesale market.
It will make a statement today, but closed its doors on Friday owing 4000 investors more than $80 million. It has a loan book of $630 million.
Assuming the worst, it will be the second finance company to fall over in a fortnight, after Nathans last week, and the sixth in 15 months.
Finance company expert Malcolm Bruce of KPMG noted Property Finance and other firms were not talking about credit issues on their assets.
"It totally comes back to investor confidence and the retention rates on deposits for the finance companies."
Grant said in the US, Australia and New Zealand the market for funding for mortgages had dried up. Firms using securitised lending would have difficulties raising money.
- NZPA
