Two of the country’s biggest banks – ASB and ANZ – have now stopped offering new home loans to customers with deposits below 20%.
ANZ had confirmed on Monday that he was taking a “break” of loans over 80% of a home’s value, citing the Reserve Bank’s limits on high loan-to-value (LVR) loans. ANZ had only reinstated loans below 20% in February after being part of a group of large banks take time on low deposit loans last November.
Then, in response to a query from interest.co.nz, the ASB replied on Tuesday that it had “temporarily” stopped offering new home loans to customers with an LVR (loan to value ratio) of more than 80%.
Meanwhile, other major banks at this stage do not appear to be following the lead of ASB and ANZ. Westpac, BNZ and Kiwibank say they are still offering loans to those with deposits below 20%.
Explaining the ASB’s action, an ASB spokesperson said: “We currently have a full pipeline of clients who are pre-approved for a home loan with an LVR greater than 80% (less than 20 % deposit).”
She therefore said that to ensure that ASB continues to meet the Reserve Bank of New Zealand (RBNZ) requirement to have no more than 10% owner-occupied mortgages at this level, the halt temporary had been made.
“We continue to document loans for clients currently in our pipeline with an LVR greater than 80% who find a property within their pre-approval timeframe, and we continue to accept applications from clients who meet the LVR exemption criteria. loans from the RBNZ (which includes loans of up to 90% LVR for customers looking to build a new home),” the spokesperson said.
“We will continue to assess our portfolio in line with RBNZ requirements and seek to resume this type of lending as soon as possible.”
ANZ was approached on Tuesday for additional information about its move and asked what advice it had for customers with limited deposits on what they could do.
‘Gathering a down payment for a new home can be difficult, as every client is different we can only really give general information,’ an ANZ spokesperson said.
“We are committed to helping first-time home buyers access homes and we support and are open to the different ways a customer may choose to do so.
“We note that the steps we have taken are a temporary measure and as soon as we can, we will resume providing approvals for low deposit loans. New construction low deposit loans remain an option for people” , she said.
“If you have been a KiwiSaver member for at least 3 years, you may be able to withdraw your KiwiSaver savings and/or apply for a first home grant from Kāinga Ora – Homes and Communities (formerly known as Housing New Zealand) to help you in your first home.
“For those who have family who can help, there are also options, we always advise family members to seek independent legal advice when going this route.”
Asked about the demand they were seeing for low deposit loans at the moment amid rising interest rates and falling house prices, the spokesperson said: “We generally see demand stable enough for low deposit loans.
“Rising interest rates and an easing housing market have meant that we have started to see a decline in demand for global loans.”
The ANZ and SBA decision comes at a time when house prices have already fallen around 6% from their peak last November – and are set to fall further, while mortgage rates rise further in addition, most rates are now above 5%.
But other banks contacted say they still offer high LVR loans – although it’s clear this is subject to individual customer circumstances.
A BNZ spokesperson said BNZ had not changed its low capital parameters “and continues to lend to customers with less than 20% down payment, depending on the specifics of the agreement.”
“All loan decisions are made on a case-by-case basis.”
Westpac says it “regularly” reviews its housing book against RBNZ LVR limits “and currently has no plans to suspend loans to customers with deposits below 20%”.
A spokesperson said Westpac has “a number of options” available to support first-time homebuyers with small deposits, including Family stepping stoneKainga Ora First home loans and Kainga Ora First home partner. Customers might also consider purchasing new construction that is exempt from the high LVR restrictions.
The spokesperson said demand for high LVR loans had been “constant” over the past two months.
Kiwibank’s senior product manager, Home Loan, Pip Maxwell, said the bank was “pleased to be able to continue to support” first-time home buyers with less than 20% home loans on deposit through programs such as as the first home loan, new construction with low net worth and other properties. ways such as Condominiumwhich she said was “another way for Kiwi to gain ownership by associating with friends or whānau to gain access to the ownership ladder”.
“For any LVR loan over 80% subject to RBNZ restrictions, we give priority to Kiwibank customers who have us as their primary bank and are looking to buy their first home. Our home loan specialists can help customers understand the different options that may be available to them.”