First-home buyers feel lending pinch

Stephanie Hall and Ryan Instone enjoy their house, which they bought just before lending criteria...
Stephanie Hall and Ryan Instone enjoy their house, which they bought just before lending criteria were tightened. Since the change, the number of first-home buyers has dropped significantly. Photo by Dan Hutchinson.
The number of first-home buyers in Dunedin has dropped since strict lending criteria came into force late last year.

Real estate agents, mortgage brokers and figures from Quotable Value New Zealand all tell the same story - there are fewer first-home buyers in the market in Dunedin.

From October 1 last year, the Reserve Bank directed banks to restrict lending to buyers with less than a 20% deposit.

Real Estate Institute of New Zealand Otago spokeswoman Liz Nidd said all of the buyers who had pre-approved loans before the changes had now either bought properties or their finance had lapsed.

''Yes, there are less first-home buyers in the market and we have seen that consistent downward trend ... I don't think we are necessarily going to trend down any further.''

Quotable Value released data last week that showed a rise in the percentage of first-home buyers in the overall market in October and November before a sharp drop in December and January.

In Dunedin, the percentage of first-home buyers was estimated to have dropped to 19.3% of the market from 21.4% before the lending changes although the market over that period was considered ''volatile'' by Quotable Value.

Ms Nidd said there were still options for people with less than a 20% deposit, including Welcome Home Loans that only required 10%.

Banks still had a small number of low-deposit loans they could offer and people could draw money from KiwiSaver accounts for a house deposit.

''Don't just throw your hands in the air and give up hope.''

Mortgage Link Otago director Glenda French had noticed the drop in first-home buyers and others who had ''missed out'' on finance because they did not meet the rules.

She said those buyers who were in a good financial position still had options with the main banks or non-bank lenders, some of which were offering two-tier loans that amounted to 100% finance.

 

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