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Easing the lending restrictions on banks will only make a minimal difference to first home buyers, a real estate industry body says.
The Reserve Bank this morning said it would ease the lending restrictions on bank lending to home buyers and property investors from January.
The change will increase the cap on banks from 10 percent to 15 percent for new mortgage lending to owner occupiers.
Currently no more than 10 percent of loans can go to owner occupiers with a deposit of less than 20 percent.
It will also ease the restrictions for investors.
At the moment only 5 percent of lending is to investors who have a deposit of less than 40 percent.
That will alter slightly to allow those with deposits of less than 35 percent for no more than 5 percent of investor lending.
But Bindi Norwell, chief executive of the Real Estate Institute of New Zealand (REINZ), said it was surprised and concerned that the loan-to-value ratio remained the same for first home buyers, with most still needing to have a 20 percent deposit.
"For some months now, the institute has been calling for a review for first time buyers to make it easier for them to get a foot on the property ladder.
"We constantly receive feedback from our members around the country that for many young couples, saving a 20 percent deposit is just too much for them - especially when they're already paying rent.
"With a median house price of $530,000 in New Zealand, this means a deposit of $106,000 is needed. In Auckland, with a median house price of $850,000, this is a deposit of $170,000.
"Today's announcement only provides minimal assistance to help first-time buyers who are desperate to achieve their property dreams."
Norwell said while the lift in the bank lending cap from 10 percent to 15 percent would make it easier for banks to be more flexible, she questioned whether the banks would ease restrictions for first-time buyers in line with the recommendations or keep lending at current levels.
Bruce Patten, a mortgage broker at Loan Market, said what impact the change would have really came down to the banks.
"They have definitely got the funds - but whether they have got the appetite to lend it."
Patten said the banks were currently running at about 8 percent of new lending to those with a deposit of less than 20 percent.
He said one bank was doing virtually no lending at under 20 percent, another two were doing some lending up to 15 percent while the fourth bank changed from week to week.
Patten hoped the easing would encourage all the major banks to re-open their lending to those with a deposit of just 10 percent and to firm up pre-approvals which would give buyers more certainty about how much they could borrow.
"I hope it will be enough. It is a pretty tentative door-opener."
Patten said he believed the cap should have gone up to 20 percent for first home buyers and nothing for investors.
He believed the change for investors - allowing a small number to have a deposit of under 35 percent wouldn't have any impact.
"I think it is almost completely a waste of time."
But he said it was up to the banks now whether they relaxed lending or sat on their hands like they had for the past few months.