About 500 Otago home buyers could be affected by the Reserve Bank's new mortgage lending limits, Labour leader David Cunliffe says.
The restrictions on banks lending to people who need to borrow more than 80% of a home's value come into affect today.
Mr Cunliffe contacted the Otago Daily Times yesterday to say the restrictions would make life difficult for home owners in Otago, although the new policy was targeted at fixing housing inflation in Auckland.
''It's not Otago's problem, yet the Reserve Bank has gone with a one-size-fits-all policy taking no account of first-home buyers.''
It was estimated 13,000 home buyers across New Zealand would be affected by the changes.
Otago's house prices rose by 3.9% last year, whereas Auckland's rose 12%, he said.
The lending limits were National's failed attempt to solve the Auckland housing problem and it was clear it did not consider their impact on the regions.
Prime Minister John Key has hit back at Labour over the lending limits, saying home buyers are better off under National because of lower interest rates and no capital gains tax.
He also said it would be wrong for the Government to interfere with the Reserve Bank.
Labour's KiwiBuild policy - building 10,000 modern, affordable homes annually for a decade, a capital gains tax limiting the profits on property speculation, and smarter engagement between the Finance Minister and the Reserve Bank - were other possible solutions to Auckland's housing crisis, Mr Cunliffe said.
Mortgage Link Otago co-owner Glenda French said while house prices were lower in Otago, saving 20% of an average house price of about $345,000 was still a lot of money ($69,000).
''This has made us realise how much work we do in the under 80% area.''
Most banks had advised brokers not to send them pre-approval applications for anyone wanting 80% or more finance.
However, banks were still allowed to lend to those needing 80% or more, just in smaller numbers than they had in the past, she said.
People should still meet a mortgage adviser as each person's case was individual and matters like good savings and purchase histories were even more important now.
There were also KiwiSaver grants and Welcome Home Loans, with changes to the loans thresholds coming in today also.
Applicants now only needed a 10% deposit to qualify and in Otago the house price cap was $300,000 and in Queenstown Lakes District $425,000.
Income caps were now $80,000 (before tax) for one borrower and $120,000 (before tax) for two or more borrowers.
''These fall outside the LVR restrictions, so there is still scope out there,'' Ms French said.
