New loan restrictions mean the "poor middle-class" hoping to
buy their first home will be left out in the cold as banks
cherry pick their ideal customers, mortgage brokers say.
However, borrowers wanting low deposit loans are being told
not to panic because there are ways of getting around the
Reserve Bank's policy.
First home buyers with less than a 20 per cent deposit -
considered a high loan-to-value ratio (LVR) - is about 12 per
cent of banks' new loans.
Overall, low equity loans comprise 29 per cent of the major
banks' lending. However, under the new limits, to come into
effect on October 1, banks would have to restrict these loans
to just 10 per cent of their new lending.
Commentators have predicted other banks will follow
Kiwibank's lead in prioritising first home buyers because
they were valuable long-term customers.
But a Herald survey of the five major banks found only two -
Kiwibank and ASB - would commit to who they would prioritise.
Kiwibank said it would put first home buyers at the top of
the queue and ASB said their first priority would likely be
their existing customers.
The three other major banks, Westpac, BNZ and ANZ, did not
answer the Herald's specific questions and, instead, gave
statements. ANZ and BNZ said they would support first home
buyers but Westpac simply said they would "remain open for
Squirrel Mortgage Brokers' chief executive John Bolton said
the "poor middle-class" was the group losing out from the
policy. "The ones at the bottom will get picked up by Housing
New Zealand and Welcome Home Loans and the rich can look
after themselves. It's the lower-end of the middle-class that
have to bear the cost of the rest of society."
The changes could contribute to falling interest rates and Mr
Bolton recommended that homeowners split their mortgage to
both fix and float different segments. "When banks fight each
other, the consumer wins."
Professional Advisors Association spokeswoman Jenny Campbell
said the tighter regulations meant banks would "cherry pick"
the customers they wanted to give their allocation of
high-LVR loans to and those would be people with high incomes
and secure jobs.
"Banks see those people as good, long-term customers so
they'll get a good deal. But if you're a lower-value customer
- if you're trying to buy in the regions for example - you
could go to the back of the queue."
She urged anyone concerned about their capacity to get a loan
to talk to a broker before making any moves as they could
give impartial advice and open doors to other alternatives.
Second tier lenders, like Liberty Financial and Resimac, who
both raise money via securitisation in Australia, offered
competitive rates but were outside the regulations because
they weren't banks. Ms Campbell said these institutions
offered ways of getting around the loan restrictions.
- Amelia Wade of the New Zealand Herald