The Queenstown Lakes Community Housing Trust announced a new starter loan package last night for first-time buyers of homes in the Wakatipu Basin.
The loan will consist of a five-year mortgage at a fixed interest rate of 5.20%. There will be no penalties for early exits.
Initially the loans would only be made available for lots 1-16 in Nerin Square on Lake Hayes Estate, although more lots would become available from January.
The trust's chairman David Cole and executive officer Julie Scott announced the details of the pilot scheme.
Mr Cole said a large problem with New Zealand's affordability was how people were paying.
New Zealand had created an unsafe buying environment with a culture of "short-term borrowing" and uncompetitive mortgage rates. Buyers of homes measured affordability by their ability to meet mortgage repayments, which made New Zealand "severely unaffordable" on a global scale.
A homeowner's debt service ratio (DSR) was calculated by subtracting the household income from their mortgage costs.
New Zealand's average DSR was 10% to 18% higher than the internationally defined affordability rate. The answer for Queenstown was mortgage repayments comprising no more than 30% of a household's gross income.
New Zealand's two-year rates were at least 77% higher than in the UK, Canada, Singapore and the US and "it makes no financial sense to buy a house", he said.
The starter loan package would lock in affordability beyond the purchase date of the house.
The loans will be available only for those with permanent residency, buyers of first homes, those in full-time employment, earners of low to moderate incomes and those who have saved a minimum of a 5% deposit.
