Finance – Hope for first time buyers

If you’ve been saving for a first home over these last few years then you could be forgiven for thinking your efforts were futile, as the property increases seemed to constantly outrun your saving progress. With the average Auckland home sitting currently at over $1 million, a modest first home might set you back around $700,000 and putting down a 20 percent deposit would require saving $140,000. Wow! I know my wife and I didn’t need that much when we bought, but our children are faced with a very different picture in front of them. If you could save $500 per week, it would take you about five years to save that amount and let’s be honest, most people are not saving this amount.

Cut this requirement in half though, throw in some KiwiSaver for good measure, and suddenly home ownership looks possible again. If you’ve been in KiwiSaver for six years or more and earn about $50,000 per annum, then your balance should already be around the $40,000 mark if you’ve done it right. Combine this with your partners’ savings and you could be good to go out and find a home right now.

Although property prices are still increasing, there was some welcome news for first home buyers at the start of this year. Although current LVR restrictions are still in place for residential property, meaning a 20 percent deposit is still the norm, the Reserve Bank has eased up slightly, allowing lenders to extend the percentage of loans over this amount. Where they could previously lend up to 10 percent of their total book value at less than a 20 percent deposit, this has been increased to 15 percent of their book value as of January 3.

Leading the field, ANZ has come out with the first offer we know about and is offering up to 90 percent LVR loans to home buyers who are existing customers and have strong servicing. With other lenders perhaps following shortly, this comes as very welcome news to many.

Now people are asking how long this will last and to be quite honest, I can’t tell you. An extra five percent to the books of these major lenders means a considerable amount of money has become available so I don’t think this will be a one-week promotion. However, when our office opened on January 8 we had applications already lined up and waiting so people are jumping at this new offer, even though most people don’t even know about it yet! If you think you’ve got a 10 percent deposit available, then 2018 might be off to a better start than you ever imagined – but don’t wait too long.

Mathew Sturge is the chief executive of Kiwi Assist Financial Services, based on the Hibiscus Coast. His interest in finance stems from his own experiences coupled with a love of numbers and he has been in the business since 2010. Mat lives in Tindalls Bay with his family. His Finance column will be monthly.