Welcome Home Loans to expand

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[UPDATED with minister's comments] The Welcome Home Loan scheme, which is designed to help first home buyers is being expanded.

Monday, April 14th 2014, 3:33PM 1 Comment

The Co-operative Bank has confirmed that it has been accepted into the scheme.

The Welcome Home Loans scheme has been running for many years and hasn't been very popular with lenders or borrowers until recently when the Reserve Bank introduced its LVR lending restrictions. Since then the scheme has found popularity as the low equity loans written as Welcome Home Loans don't count as low deposit loans in terms of the Reserve Bank's criteria.

Lenders spoken to by mortgagerates.co.nz report that they have had strong levels of Welcome Home Loan business.

Housing Minister Nick Smith said "there has been heightened interest in the scheme since the introduction of the Reserve Bank’s loan-to-value ratio limits, and the Government’s expansion of the scheme last year increased the income and house price caps to make Welcome Home Loans more accessible.”

Housing NZ has approved 1091 loans so far this financial year, 250 more than the number of loans approved in the entire 12 months prior to that.

Smith said he is "encouraging other banks to also join the scheme."

Under the scheme borrowers need at least a 10% deposit and there are regional lending caps. For instance the house price cap in Auckland is $485,000. In Wellington City, and Queenstown Lakes it is $425,000; $400,000 in Christchurch City and the Selwyn district; $350,000 in Thames/Coromandel, Hamilton City, Western Bay of Plenty, Tauranga City, Kapiti Coast, Porirua City, Hutt City, Upper Hutt, Tasman/Nelson and Waimakariri and $300,000 for the rest of New Zealand.

Borrowers have to meet the credit criteria of participating lenders, however Housing New Zealand providers the lenders wtih lenders mortgage insurance and participating lenders are underwritten by Housing New Zealand.

Current providers include just one big retail bank, Westpac, three of the smaller banks plus Heartland although it does not do residential lending. The other accredited lenders includes a building society and two credit unions.

mortgagerates.co.nz understands other lenders will be added to the list/

Current providers are:

• Heartland Bank
• NZCU Baywide
• SBS
• Kiwibank
• TSB
• Nelson Building Society
• Westpac 
• Fletcher Challenge Employee Credit Union

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