Mortgage lending rules changing for first home buyers and investors this January

December 07, 2018 at 4:26 PM


AUCKLAND, New Zealand – Mortgages: Up until now, banks have been forced to allocate only 15 percent of their lending to owner-occupier buyers who have a deposit of less than 20%, and only 5% to property investors with less than a 35% deposit (basically, owner-occupiers buying a house for $500,000 had to have a $100,000 deposit, while investors needed $175,000.) 

From January, the banks can allow 20% of their new mortgages to go to owner-occupiers who have a deposit of less than 20%.

The banks will also be allowed to allocate 5% of their lending to property investors who have a deposit of less than 30%.

This means more owner-occupiers with less than a 20% deposit will qualify for a home loan, while investors will need a deposit of $150,000 on a $500,000 house – about $25,000 less than previously (subject to availability bank quota).

Nick Tuffley, ASB chief economist, told the media recently that he was 'surprised by the loosening of rules for investors, as well as owner-occupiers: “They went further than a lot of people thought. We thought they might wait, given signs the market might be lifting over Spring'." 

These conditions are definitely more attractive to property investors but won't necessarily make it easier for first-home-buyers because bank credit restrictions will still apply.

The biggest barrier to you borrowing money remains your income, including how much or how little debt you currently have.

The good news

Some non-bank lenders, who are not governed by the Reserve Bank LVR restrictions, are still lending to 80% for investment property lending.

New-builds are exempt from Reserve Bank LVR restrictions, and on that basis an investor or a home buyer purchasing a newly built property may not be restricted by their deposit/equity to the same extent. 

For a personal assessment to see if you qualify, please feel free to get in touch on 09 489 8414 or email


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