Quarterly Update – 1 July 2020

Despite a very difficult time for many Kiwi’s, we are very proud pleased to announce again, a very strong quarterly distribution rate of 5.10%*. As deposit and main bank rates are exercising historical lows, we continue to be able to provide our investors this level of performance and certainly. Our loans book continues to be strong and demand for quality first mortgage short term loans is high. Because of this, we are able to continue to perform extremely well in this low interest rate environment.

Tobias Taylor

Quarterly update – 1st April 2020

We are pleased to announce again, a very healthy quarterly distribution rate of 5.10%*.  This is especially pleasing as other asset classes experience extreme volatility.  We are proud to be able to deliver such a positive result and in many ways, some normality to our investors lives at this difficult time.  We at Midlands appreciate that this is a difficult time for many. Please, be safe and take care.

Tobias Taylor

Announcement from the CEO

In light of the COVID-19 Levels imposed across New Zealand all Midlands staff, where possible, will be working from home with effect Wednesday 25th March 2020. Please note that our Hastings office will be closed to the public from this date forward.

As scheduled, we will still be running the quarterly distribution at the end of this month, as well as continuing with other essential functions of the fund. However, some functions will naturally be delayed. We appreciate your understanding at this time. Please call 0800 870 326 should you have any queries.

Be safe, and please look after yourself and each other.

Tobias Taylor, CEO

Coronavirus – COVID19 / OCR update

Coronavirus – COVID19 is a hot topic. This, and the OCR rate drop today (16th March), will lead to our current and prospective clients to ask: how does this affect lending and investments?

The short answer for Midlands is that our business model does not change. We look for quality loans, with great servicing and security, in order to ensure a consistent return to our investors. The property sector is not experiencing the volatility we are seeing in equity markets. At this time, there is no reason to see this changing, albeit some activity may take longer than originally thought. We know interest rates will stay low, especially with the interest rate announcement today, so we offer a considerable premium to our investors. The setting of our investment rate is primarily dependant on the rates we lend at. Our exposure to the OCR is via the cash we hold in the fund, and therefore very limited.

So, we at Midlands are very much in a business as a usual mindset, but as any responsible community-minded business, keeping our eyes and ears close to events.

We welcome any query on 0800 870 326. Tobias Taylor, CEO @ Midlands.

What will 2020 bring?


Tobias Taylor was asked to provide his thoughts on what 2020 will bring for an article in the 10th birthday issue of The Profit magazine. Read his article below:

What are your predictions?

I can hardly claim this is a prediction, because it is well documented.  But certainly, in the immediate term, we will continue to live in a low interest rate environment.  For borrowers, this is good news.  However, for savers and investors in income assets, it’s not so great.

One aspect of this is not fully understood: post KiwiSaver, main street banks do not have to compete for the term deposit billboard rate as much as they used to.  This is because within their own KiwiSaver products they can assign the income end of the portfolios to their own instruments.  This effectively helps fund their domestic loan book by stealth, while charging a management fee to do so. When the organisation then sells you this as an investment solution, this is called “vertical integration”.  So better deposit rates at the bank billboard are a long way off. Time to think differently!

What’s likely to change in your sector?

More regulation and more compliance.  On the lending front, the Credit Contracts and Consumer Finance Act (CCCFA) Amendment Bill is going to have some immediate implications come June 2020.

Here at Midlands, with both investing and lending, we are mature in our adoption of anti-money laundering (AML) considerations, as well as continuous disclosure, transparency, and our focus on good customer outcomes. These changes mean that financial services providers like Midlands must get “closer” to clients.  That requires investment into relationships and the delivering of soft skills if not actually giving financial advice per se. But we have to ask a lot of questions of our clients.

For this reason, I struggle with organisations moving away from genuine local relationship models and with “robo advice” or online lending models.  To me, it’s an exploration in protecting margins and revenue without investing into customers and communities. Because we have had a very good run in investment returns, I do feel there are some fair-weather models being rolled out to investors that may be challenged in a market correction. I also struggle with some passive management models with for this same reason. Automated electronic trading based on macro asset allocation, with no micro company research really bothers me. Especially when you consider Environmental Social and Governance (ESG) factors.

But personally, I hope the powers-that-be do look further into “vertical integration” and if it is delivering better client outcomes.  Certainly, the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Australia indicate it may not.

What opportunities do you see?

For us at Midlands, it’s pretty easy. Invest in our relationships and educate our investors and borrowers. We have a vanilla offering that suits our conservative investors. We continue to significantly outperform bank deposit rates, while remaining fully liquid (no lock in of funds).  We do this by close management of a quality first ranking security loans book across New Zealand. While banks have reduced their lending and offer low interest rates to retail investors, we can continue growing as we are. We are proud to be non-bank.

What technology advancements will have an impact on how do business?

During our lending process, while we personally inspect every property we lend against, a lot of the initial discovery due diligence process can be done on-line now.  This is important to ensure the quality of our lending book.  This is only going to get better.

Regarding investments, the speed to market of online services used to be hamstrung by AML requirements.  This gap has closed very quickly, and we are aware of this. Certainly, it is something we are looking into.

Tobias Taylor is the CEO of Fund Managers Central Limited, manager and issuer of the Midlands Mortgage Trust. The PDS for the Midlands Mortgage Trust is available at www.midlandsmortgagetrust.co.nz.

This article was written for The Profit https://www.theprofit.co.nz  

Article written 16th January 2020 for February issue

Quarterly Update – 1st January 2020


We are very pleased to confirm a quarterly distribution rate to investors of 5.10%*. Despite our need to hold cash within the Fund, we are committed to ensuring we produce great returns to our investors. Therefore, again, we are very pleased with this result and appreciate the faith you place in us to continue to do so.

Tobias Taylor

New Zealand Economic Outlook


The New Zealand economy has a little less wind in her sails than usual. Many financial commentators believe that growth will stabilise and begin to recover gradually in early 2020.

In November the RBNZ surprised the market and left the Official Cash Rate (OCR) on hold at 1.00%, deeming economic developments had not warranted a change in stance since the 50bp August OCR cut. Accommodative credit conditions are of paramount importance when it comes to keeping things moving. The RBNZ is certainly throwing everything at it and some economic commentators believe that the OCR will be cut to just 0.25% by May 2020!

There seems to be some credit headwinds from the banks these days, and availability is tightening up. RBNZ has recently revealed new capital requirements for locally incorporated banks and market sentiment is that this will push up lending interest rates, lower deposit interest rates and restrict credit availability.

What does this mean for our investors here at Midlands? Well, in a nutshell we are open for business and believe in the quality of our product and hope to continue our strong track record of delivering results.

Elliott Jackson, Investment Manager


  1. https://www.anz.co.nz/about-us/economic-markets-research/economic-outlook/
  2. https://www.asb.co.nz/content/dam/asb/documents/reports/quarterly-economic-forecasts/quarterly_economic_forecasts_nov_2019.pdf

Shock and Orr



Currently, it is very difficult to speak of anything but the low interest rates affecting savers and investors. The Reserve Bank of New Zealand has taken a breather with its September & November announcements and left the Official Cash Rate (OCR) at 1.00%. To be fair, after the hefty movement of 0.50% “south” on 7th August, this is welcomed in most sectors, albeit maybe a surprise.

The OCR influences the price of borrowing money in New Zealand and provides the Reserve Bank with a means of influencing the level of economic activity and inflation. An OCR is a conventional tool by international standards.[1] However, for many, it is seen as a blunt instrument that has far wider consequences.   This includes directly affecting deposit rates, especially at main street banks.

Banks use domestically raised capital (term deposits) to help fund their lending book. Therefore, “the spread” between their deposit rates and their lending rates is effectively the margin off which they operate. This revenue, as well as transactional fee and service fee revenue, is the primary source of their well published profits.

We therefore rely on competition in order to be able to shop around for better deals. However, as rates remain so low, the main banks are starting to look rather homogenised.

It was widely reported[2] recently, that the Financial Markets Authority (FMA) has found a further decline in interest rates on bank term deposits is causing more savers to consider alternative investments.

The financial watchdog said a survey of 195 term-deposit holders in August suggested 43 per cent were likely to invest less in term deposits because of low interest rates. Of those who were considering changing their investment strategy, a quarter were considering shifting savings in search of better returns.

Certainly, in our organisation, we are seeing a steady increase in queries about deposits as investors search for regular and quality yield. More so than ever, investors and savers are asking questions about quality, liquidity and generally, “what do you do with my money”? I find this heartening as for me, it seems the message is filtering through that yield is important, but quality, management and liquidity are all factors that need to be considered.

Even though there is a search for yield, the preservation of capital is front of mind, as it should be.

The low-interest rate environment is currently forecast to continue, with little real tangible signs of an end any time soon. Investors and savers can no longer wait “for things to get better”. Mainly because the outlook is that it won’t, any time soon.

Like an English tabloid paper perpetual exploration of tacky metaphors, I read[3] with great amusement that the moniker “shock and Orr” is starting to be used. Certainly, Reserve Bank Governor Adrian Orr has ingrained himself in the financial services psyche of New Zealand. In a previous profession, I remember clearly learning of “shock and awe” in military doctrine with the words “overwhelming force from the outset” still engrained in my mind 25 years since. In Mr Orr’s case, this cap certainly fits.

In my opinion, he’s a strong and bold Governor, not only for his large cut of the OCR in August, but also, his continued statements regarding bank conduct and all things economy. I am excited by the fact that we have visible economic leadership in New Zealand. The Reserve Bank Governor should be a “front of office” role. For this, personally, I applaud him.

Therefore, moving forward, we should watch Mr Orr with a deep fascination. He must navigate the country through what is largely uncharted waters. Interest rates are historically low and are forecast to remain so.  The OCR is a blunt instrument and the biggest trick, in his bag of tricks. I wonder how often he dares to play it.

One thing is for sure, this Governor won’t be offended by the term “shock and Orr”. He may even like it…

Tobias Taylor is the CEO of Fund Managers Central Limited, manager and issuer of the Midlands Mortgage Trust. The PDS for the Midlands Mortgage Trust is available at www.midlandsmortgagetrust.co.nz

[1] https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/what-is-the-official-cash-rate
[2] See for example https://www.stuff.co.nz/business/116171480/more-kiwis-looking-at-alternatives-to-term-deposits-says-financial-markets-authority
[3] https://www.interest.co.nz/business/101914/latest-anz-business-outlook-survey-shows-reserve-banks-shock-and-orr-cut-interest

Investment Manager Appointment


Elliott Jackson has joined Midlands Mortgage Trust in the newly created role as Investment Manager with effect 14 October 2019. Elliott’s primary responsibilities are investor front of office services, as well as the growth of the funds managed by Midlands.

Elliott comes to Midlands with over 30 years in financial services in the United Kingdom, Jersey, and New Zealand. More recently, Elliot acted as the regional manager – Hawkes Bay for Pie Funds Management Limited. Elliott was with the Pie team for more than 5 years, including being a part of their office move to Hawke’s Bay.

“I’m very excited about the opportunities that Midlands Mortgage Trust presents, and am looking forward be part of a growth story with a highly motivated team”, says Jackson.

“We’ve been very fortunate to attract a professional of the level of quality of Elliott. Elliot brings recent strong funds growth experience, a professional client-centric ethos and is truly committed to better client outcomes. Elliott also fully appreciates the place that a quality mortgage fund with strong regular yield holds in the current investment landscape. I’m very pleased to announce Elliott’s appointment.” says Midlands Chief Executive, Tobias Taylor.

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