State-owned Kiwibank has worked with Housing NZ, which provides mortgage insurance to the Welcome Home Loan providers that also include the Nelson Building Society, TSB Bank and SBS.
Knowles sees the product, which has attracted good business for Kiwibank worth “a couple of hundred million” as having a wider offering in future.
“We’ve run it now for a year and a half – we ran it as a pilot for Housing New Zealand but it’s been now expanded to a whole number of organisations,” he said.
“Now TSB is offering it SBS is offering it – some of the banks are offering it – so I suspect it will flow through to brokers over time as other banks come in.
“It’s not a restricted product at all, although obviously it has restrictive underwriting conditions. “So I think the first home loan market will change as that product gets more widely known – it allows them to bridge that gap that’s opened up in property prices for first home loaners,” Knowles said.
Under the Welcome Home Loan people wanting to buy a home can borrow up to 95% or even up to 100% with someone gifting that last 5%.
Knowles says he thinks demand for the Welcome Home Loan will grow quite a lot faster as more providers come in and people in the market get to know it.
Under Welcome Home Loan no deposit is needed if buying a house up to $150,000, and a 5% deposit is needed if buying a house more than $150,000, and the deposit can be gifted. The loan assists one or two borrowers earning up to $85,000 or three or more borrowers earning no more than $120,000.
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