Kiwibank will no longer accept pre-approved home loans for buyers with deposits below 20%
A first-time homebuyer, who asked to remain anonymous, is devastated after finding out that Kiwibank would not approve his mortgage application.
“I am really, really disappointed,” he told Newshub.
He and his family have been desperately trying to climb the property ladder for a year.
“I didn’t expect the rug to be ripped from under my feet.”
He is one of many hopeful buyers who may now have nowhere to go for a home loan.
“It destroys the dream of many first-time homebuyers – especially those who scrimp and save to get those 10% or 15% deposits. At the moment, that squeezes them out of the market altogether,” said Grant Patten, consultant. LoanMarket mortgages.
“It has an impact on the people that the government and the Reserve Bank have openly said are trying to help.”
In a statement, Kiwibank told Newshub she was empathetic with first-time homebuyers, but limited by the Reserve Bank. The regulator has reduced the number of risky loans banks are allowed to give to homebuyers with smaller deposits to just 10 percent of their loans.
Kiwibank is already close to this limit and is probably not the only bank.
“They’ve already cut a lot of their loans as is, other than the live deals, so I would expect that to happen more over the weeks,” Patten said.