First-home buyers are getting into market with less savings, data shows
That's a significant increase from March 2023, when there was just $510m in lending to borrowers with less than 20%, and last March, when there was $584m.
'First-home buyers basically have the monopoly on low-deposit lending allowances at banks,' CoreLogic property economist Kelvin Davidson said.
'Owner-occupiers further up the ladder may not need low-deposit finance as much so that's part of it, but I also think to some extent that the banks have been sort of reserving those speed limits for first-time buyers.
'For quite a while now we've seen about 75% or 80% of all low-deposit lending to owner-occupiers in general has been to first-home buyers.
'About two in every five first-home buyers, or even a bit more than that, are entering with a low deposit.'
He said some buyers might not even be aware it was an option.
'Some people might be out there thinking 'gee I don't have the required 20% so I can't buy a house', but actually there are allowances there and a lot of it goes to first-home buyers.
'I think if you want to get into the market with a reduced deposit there probably is capacity - the speed limits overall aren't really being tested.
'The speed limit there is 20% [of new lending] but only about 12% is going out at low deposit … then other tests come into it.'
He said KiwiSaver was also helping.
In April, 3970 people withdrew their KiwiSaver funds for a first-home purchase, up from 3320 in April 2024, with a total of $167.3m withdrawn.
Mortgage adviser Glen McLeod, head of Link Advisory, said borrowers with less than a 20% deposit were able to access interest rates from about 4.99% to 5.59%.
'Those who qualify for a Kāinga Ora First Home Loan can access these same rates with as little as a 5% deposit, though a 0.50% fee applies.
Advertise with NZME.
'When the deposit is under 20%, most lenders apply a low equity margin, which is typically tiered based on the loan-to-value ratio.
'These margins vary by lender, but we're starting to see some shift in the market – one major bank has recently removed these margins altogether, offering a standard rate and a discounted rate for borrowers with more than 20% equity.'
He said it was noticeable that more applications were including income from boarders.
'Whether it's friends helping with mortgage payments or adult children moving back home, many buyers are looking for ways to improve affordability.
'In some cases, income from secondary dwellings or granny flats is also factored in, where accepted. It's a reflection of how people are adapting to meet lending criteria in a challenging environment.'
Adviser with Loan Market Karen Tatterson said a first-home buyer with ASB who had a 10% deposit would pay the advertised interest rate plus a 0.75 low-equity margin.
'As an example, their one-year rate would be 5.7%.
'ANZ, who do not charge a low-equity margin, apply their standard rate so for first-home buyer at 90%, their one-year rate would be 5.59%.'
She said all the banks were also offering a $5000 cash contribution for a first-home buyer.
Overall, Davidson said the market continued to steadily become more active.
Sales were up 4% compared to a year earlier in April, taking activity to 7% above the historical normal for this time of year.
'Sales activity has been on a steady incline, and we're now starting to see this translate into home values,' Davidson said.
The Cotality Home Value Index rose 0.3% in April – the fourth consecutive monthly increase – although growth remains modest.
Among the main centres, Hamilton and Christchurch led the gains, while Dunedin, Wellington and Tauranga showed flatter results.
'Despite these signs of improvement, the market remains tilted in favour of buyers,' Davidson noted.
He said the outlook for the rest of the year was for moderately increasing prices and activity.
'We're expecting a moderate upswing, with national property values forecast to rise around 5% for the year,' he said.
'Lower mortgage rates will be a key driver. But we're also watching the wider economy, the labour market, and the impact of lending restrictions, particularly debt-to-income limits.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
5 hours ago
- RNZ News
Regional property prices set to grow faster than main centres
An aerial view of an Auckland suburb showing many blocks of housing. Photo: RNZ / Kate Newton Property prices in the regions may be set to grow more quickly than the main centres. Cotality, formerly Corelogic, has released its latest data, which shows property values nationwide dropped 0.1 percent in May and are now 1.6 percent lower than a year earlier. Hamilton prices were up 0.1 percent in the month but Dunedin and Tauranga were down 0.1 percent. Auckland was down 0.3 percent and Wellington 0.4 percent. Christchurch was down 0.8 percent. Invercargill was up 0.5 percent in the month, Queenstown 1.2 percent and Rotorua, New Plymouth and Hastings also reported growth. "I don't want to make too much of it but I think we've seen that little bit of a split between the regions and the main centres," said chief property economist Kelvin Davidson. "There's a sense there is a gap opening up between the main centres and the regions. It's probably just symptomatic of the market we're in." Photo: SUPPLIED He said while there were some factors that applied everywhere, such as lower mortgage rates and a weaker economy overall, some provinces were benefiting from the comparatively stronger performance of the primary sectors. Fonterra's milk price forecast for the 2025/26 year is $10 per kilogram of milk solids. "Farming is doing pretty well, that might be driving a bit of spending in those areas and perhaps giving people a bit more confidence to be transacting in the housing market." By comparison, areas such as Wellington were still feeling the impact of public sector cuts and it would take a broader-based economic recovery to see house prices lift. He said the May figures were a reminder that any housing upturn would be slow and variable for the time being. "Lower mortgage rates are clearly going to be bolstering households' confidence as well as their wallets, and there were signs of higher loan-to-value and debt-to-income ratio lending activity in the latest Reserve Bank figures. "But it's not one-way traffic. After all, housing isn't necessarily affordable in absolute terms, while the economy and labour market remain subdued too. Indeed, filled jobs edged lower again in April. These are certainly restraints on buyers' willingness to push ahead with property deals or to pay higher prices." He said the nationwide drop in values in May could be reversed next month. "But anybody who was anticipating a sharp or widespread increase in property values as we got further into 2025 continues to be disappointed. "The return to some kind of normality for sales volumes should start to eat into the overhang of available listings on the market in the coming months. But listings are starting from such a high level that buyers are likely to continue to have the upper hand for most of the year, with the associated restraint on house prices." He said, based on current trends, his previous forecast for a 5 percent increase in values nationwide this year could be a bit strong. "Although the year still has quite a long way to run. "Either way, a subdued or 'balanced' market is probably what we've been needing for a while now - opportunities for different buyer groups, first home buyers and investors included, with reduced risk of prices running away from them again." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
The Spinoff
a day ago
- The Spinoff
Echo Chamber: The trouble with taking David Seymour at his word
If the Act Party leader misspoke in a forest and no one was around to hear it, would it still make a sound? Echo Chamber is The Spinoff's dispatch from the press gallery, recapping sessions in the House. Columns are written by politics reporter Lyric Waiwiri-Smith and Wellington editor Joel MacManus. A long weekend stumbled into a short week back in the House, where a Mad Hatter call of 'change places!' has seen NZ First and the Act Party swap sides at the tea party. Over the weekend, some 642km north, NZ First leader Winston Peters' reins of power as deputy prime minister were handed over to Act leader David Seymour, who celebrated the occasion in typical low-key style: with an Auckland brunch for fans of David Seymour to pay their respects to David Seymour. Peters, sat in the south end of the chamber, now rests in a no man's land two seats away from Te Pāti Māori, where co-leader Rawiri Waititi shot glances to his koro from up north throughout the session. Meanwhile Seymour, at the prime minister's side, whispered sweet nothings into Christopher Luxon's ear then flipped through documents throughout the circus, with three full glasses of water at his side. Before Tuesday's question time began, Te Pāti Māori's Hana-Rawhiti Maipi-Clarke called for the House to acknowledge the 30-year anniversary of Waikato Tainui's raupatu settlement, with which only one party leader took issue. If we celebrated every single successful Treaty settlement, Peters argued, we'd be losing valuable time almost every day of the week. Labour MP Peeni Henare's unimpressed voice floated through the chamber: 'Wooooow ….' Greens co-leader Chlöe Swarbrick was first up on oral questions, and once the prime minister agreed that yes, he did stand by all of his government's statements, she went in for her kill: the funding, or lack thereof, for the government's increased KiwiSaver contributions, an alleged hole in Budget 2025 that the party has been quite happy to claim responsibility for discovering. Luxon shot down Swarbrick's claims the government had failed to budget for its own employer contributions to KiwiSaver, saying the bill would be footed through baselines. And the prime minister also didn't accept claptrap from Labour leader Chris Hipkins, nosily asking how many families had received the $250 Family Boost rebate promised last March. 'I don't have the numbers in front of me,' Luxon said, before being cut off by Labour's Willow-Jean Prime: 'Do you have them at all?' The minister for resources, Shane Jones, had spent the first 30 minutes of question time spurting his favourite slogans – 'mining!', 'fossil fuels!', 'heavy metal!' – at random, even when no one was talking about mining, fossil fuels or heavy metals. Finally, his NZ First colleague Tanya Unkovich offered him some patsies, so he could relish in the noble art of drilling a well into gas fields like those in Taranaki, and having the Crown take a 10-15% stake from these projects. 'Gas is short,' Jones started – 'not from you!' an opposition voice called – then 'talk is cheap'. The country's natural gas resources have been in decline, he declared, thanks to a 'foolish and dangerous … fateful decision of 2018 ' to ban oil exploration (Jones was indeed a minister for that Labour-led government at the time). Labour MP Kieran McAnulty, a star student of the school of standing orders, raised a point of order: that was clearly a political statement, he told the speaker, and shouldn't have been allowed. Well, I disagree with you, Gerry Brownlee replied – how could a government campaign against something and not be able to talk about it? Proving his respect for Brownlee's rulings and never-ending wish for unity among the parties, Jones began his next answer: 'Decisions riddled with woke ideology from the past government …' and the House erupted in laughter, clearly tired of such performative acclaim. Labour MP Duncan Webb was allowed to pose a question to a member of parliament rather than a minister, asking National backbencher and chair of the finance and expenditure committee Cameron Brewer why the submission window for the Regulatory Standards Bill was only open for four weeks, when the bill had a six-month reporting deadline. Parliament's left bloc has gone hard on campaigning against said bill, an Act Party classic hit, with claims that it's more controversial and damaging to Treaty obligations than the recently deceased Treaty principles bill. Mr Speaker, Brewer explained, the minister for regulation (aka Seymour) has already written to me to explain that he had 'misspoken' when the bill had its first reading on May 23. You may remember Seymour moved for the bill to be reported to the House on December 23, 'when he in fact meant to say September 23!' He'd take the minister at his word, Brewer said, as groans rippled through the House. So, Webb continued, would the committee chair bend to Seymour's demands, or follow the usual parliamentary process which asks that select committees be given six months to report back to the House? Brewer quoted former clerk David McGee's Parliamentary Practice: 'it is not uncommon for bills referred to select committee for four months to have a submissions period of four weeks'. Seymour, clearly tired of having his name and work thrown around with such indifference, rose for a point of order. When he failed to argue that there was no decision of the House to even be disregarded in this case, Seymour continued to argue with the speaker from his seat, annoying a voice on the opposition side: 'Just because you're deputy now!' Eventually, Brownlee was happy with Brewer's assertion that Seymour 'clearly misspoke', and McGee's guidance was enough to 'end the matter'. The faces of the opposition looked like they would be doing anything but, and maybe that's the trouble with taking Seymour at his word: nothing he says will ever be good enough for at least half of the entire 54th New Zealand parliament. Once question time had wrapped up, Seymour headed to Brewer's bench, perhaps passing along some further notes and corrections to misquotes. A tiny question time blip, a long weekend to celebrate his ascension to 2IC and now in the UK to take part in an Oxford Union debate on stolen land, the Act Party leader's cup still runneth over, even as his three water glasses remained untouched.
RNZ News
a day ago
- RNZ News
Call to rethink tax on KiwiSaver
Photo: RNZ KiwiSaver members could be significantly better off if New Zealand adopted a taxation model similar to Australia's, an economist says. Simplicity chief economist Shamubeel Eaqub ran some numbers modelling a system similar to Australia's, where contributions and returns are taxed at 15 percent. In New Zealand, full tax is paid on income contributed to KiwiSaver, and returns in PIE schemes taxed at an investor's prescribed investor rate up to 28 percent. Eaqub said an "average" KiwiSaver investor starting now could end up $60,000 better off in nominal terms at retirement on a model similar to Australia's. If tax was not paid on contributions or returns, they could be about $1 million better off - and if only taxes on returns were removed the gain would be about $300,000. "In Australia, the context is there's some conversation about whether the tax breaks are too generous for richer people. It's not that it's perfect but the point is in other countries it's heavily incentivised for people to save in their private pension." But it was not in New Zealand. Kirk Hope, chief executive of the Financial Services Council, which represents KiwiSaver providers, said the Australian model was different because that country has a means-tested pension. "The tax break that occurs in New Zealand occurs when you retire, when you get national super.. that is the equivalent of about $500,000. So I think it's hard to do a comparative analysis without acknowledging that there are significant differences between the schemes and what they are trying to achieve." But he said if the tax on savings for New Zealanders was reduced it would give future governments more "fiscal options" in relation to superannuation. He said New Zealand previously had a system that was EET - or exempt, exempt, taxed, where contributions were tax-exempt, exempt from tax within the scheme and then fully taxed when withdrawn. The Tax Working Group in 2018 acknowledged that the change from that system had potentially created incentives for New Zealanders to direct savings into investments like houses instead. Hope said it would be expensive to adjust back to EET but there could be other changes that would be more affordable. The tax working group estimated that ignoring behavioural changes, it would cost $200m to $300m a year to move to a system where returns and withdrawals were not taxed, and $2.5b a year to move to an EET system. "The higher initial cost for an EET regime arises from the fact that there will be a substantial deferral period before significant amounts are withdrawn from the scheme, and thus taxed under the third 't'. Although these are very different initial costs, the costs will be the same in the long run on a net present value basis." Hope said providing different forms of tax incentives would be beneficial for savers. He said removing or reducing the employer contribution tax would be particularly useful for low-income people. Kernel Wealth founder Dean Anderson said New Zealand was one of the few countries operating a TTE - taxed contributions, taxed returns and exempt withdrawal - model. "Our future savings would be much better off under an EET approach, where we don't pay tax on the way in but on the way out. "With low savings rates in NZ, the government should be exploring everything in its powers to grow savings rates, which benefits NZ and Kiwis over the long term. "But it's not a surprise. The recent meek KiwiSaver policy announcement did all the hard work to announce a positive gradual increase to KiwiSaver contributions, yet they fell short by announcing a three-year policy rather than outlining a decade plus long policy of incremental KiwiSaver increases." Ana-Marie Lockyer, chief executive at Pie Funds, said KiwiSaver members were at a disadvantage compared to Australians because there was no upfront tax incentive or concession as in Australia to encourage them to contribute more. "Maybe consideration of a mid-tier flat tax rate on savings up to a certain amount would encourage savings." She said employer contributions were also taxed so investors lost the benefits of compounding, and investors paid tax on bonds and deemed dividends on global equities so they were effectively paying a capital gains tax. "So contrary to the government's stated goal of helping New Zealanders' grow their KiwiSaver balances, these factors mean New Zealanders have less incentives to make voluntary contributions and pay more tax on investment earnings, resulting in smaller balances at retirement relative to our Australian friends." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
