Banks topple Tower’s mortgage fund
New Zealand financial services group Tower has closed its mortgage fund, Tower Mortgage Plus, with proceeds expected to be returned to investors starting next month.
In an announcement to the Australian Securities Exchange, Tower Investments chief executive Sam Stubbs said the product is no longer a relevant and competitive investment in the current environment where banks are competing so aggressively for deposits.
“The current credit environment and increasing arrears and defaults require more conservative provisioning for bad and doubtful debts, which impacts the interest rate payable.
“This had led to increasing redemption requests and it is prudent and appropriate to act in the best interests of all investors by winding up the fund.
“We recommended this to the Trustee and they agreed,” he said.
The fund is currently $242 million with 450 residential and commercial first mortgages totalling $220 million in value.
According to Tower, investors may face unfavourable tax treatment because the fund is a Group Investment Fund, and therefore difficult to convert into a PIE compliant product.
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