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Govt home loan scheme OK'd

The government’s plan to assist first-home buyers into their own homes has proved to be far more benign in terms of its economic and housing market impact than many had feared, although it still has its critics.

Monday, August 4th 2003, 6:02AM

by Jenny Ruth

The government’s plan involves a type of mortgage insurance scheme for those on incomes up to $50,000 a year or up to $100,000 per household.

Those who qualify can buy a house costing up to $100,000 without a deposit. Those with a 5% deposit can buy a house costing up to $200,000. A point of difference to other similar schemes is that the 5% may be gifted rather than the applicant having had to prove a savings record.

Normal credit criteria such as a good credit record and sufficient income to make the mortgage payments will also apply.

Initially, the scheme will be run as a two-year pilot program through the government-owned Kiwibank, although it may be extended to other lenders. The government is budgeting $5.3 million for the scheme, which will begin in September, and Kiwibank estimates it may cover 1,800 home loans over the two-year period.

Graeme Woodley, president of the Real Estate Institute, who had vigorously opposed the introduction a a scheme similar to Australia’s where the government contributed lump sums towards a housing deposit, says he "applauds" the scheme.

"It will give some people the opportunity of getting into their first home" but it is unlikely to have the distorting impact on the housing market that an Australian-type scheme would have, he says.

The Australian scheme has been criticised as having added fuel to the already over-heated Australian housing market.

New Zealand Mortgage Brokers Association chairman Brian Berry agrees that it shouldn’t have a distorting impact on the housing market and approves the sentiment of making it easier for first-home-buyers, but still sees the scheme as an anti-competitive move.

"The government’s making it not a level playing field for the lenders in the market or for the lenders’ mortgage insurance companies. I don’t think the government should be getting involved," Berry says.

While it shouldn’t have much impact where houses under $100,000 are concerned, it probably will have some impact on the market for houses costing between $100,000 and $200,000. "That’s quite an aggressive market" and a number of players in that price range will lend with only a 5% deposit.

Kiwibank currently doesn’t deal with mortgage brokers. Berry says it’s hard to see the government extending the scheme to all banks.

Economists agree the scheme shouldn’t have much impact economically. "I don’t think it will be that material," says John McDermott, chief economist at National Bank.

With the no deposit part of the scheme, "you’re not talking about major urban centres. It’s social policy. It sounds like a nice thing to do for some people, but it’s very small scale."

Darren Gibbs, senior economist at Deutsche Bank agrees: he points out that the total mortgage market is worth about $60 billion.

"It’s clearly targeted at people at the lower end of the income scale. I don’t think it creates any particular distortions."

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 ▼7.74 ▼7.35 ▼6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 12 June 2024 4:04pm

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