Someone buying a $500,000 inner-city or city-fringe apartment could now potentially secure finance with $75,000 deposit. Photo / Supplied
One of the major banks has dropped its minimum deposit thresholds for apartments, a move that will help more struggling house hunters into their first home.
Today's announcement by Westpac was foreshadowed by the Weekend Herald last month.
It will allow some buyers to purchase apartments worth at least $355,000 with just a 15 per cent deposit - down from the current 20 per cent minimum - provided the property is bigger than 50sq m.
The new policy will come into effect on Monday.
Other banks are expected to follow suit, throwing a lifeline to the city's beleaguered first home hunters who are fast being priced out of the market because of surging house price inflation and cut-throat competition.
Westpac says it is rolling out the new policy from this week. It means someone purchasing a $500,000 inner-city or city-fringe apartment could potentially secure finance with $75,000 deposit - down from the current $100,000 minimum.
The policy is expected to be aimed at first home buyers rather than investors and will only apply to owner-occupier apartments.
It comes as the average asking price for residential property across the city has broken through the $800,000 mark for the first time.
Figures released yesterday by Realestate.co.nz show Auckland vendors wanted an average price of $820,016 in June. This was 3.4 per cent higher than the previous record of $793,260 recorded in May, and follows QV figures last month showing the average value of Auckland homes is now more than $820,000.
Kiwibank has also confirmed it is reviewing its apartment lending criteria in a move designed to help customers into home ownership.
"This review is well underway, however we are not yet in a position to provide any detailed information," a spokesman told the Herald.
Meanwhile, Housing New Zealand is reviewing its Welcome Home Loan criteria - potentially allowing more people to buy apartments through the Government-backed lending scheme with just 10 per cent deposit. A decision is expected in the next few months.
Loan Market mortgage adviser Bruce Patten said Westpac's announcement was effectively issuing a challenge to other banks around the Auckland apartment market.
The lower deposit thresholds would help desperate house hunters who could no longer afford a standalone Auckland home take their first step on Auckland's rampant property ladder.
By only making the new measures available to first home buyers and not investors, it went some way to creating a market that most entry level house hunters had been shut out of, he said.
"We only expect this to get better for them as others change their policy. This is the first step to bringing first home buyers the opportunity to get their slice of the housing market in New Zealand."
But Kiwis now had get their heads around apartment living "as opposed to the quarter-acre section that we have been used to growing up".
Mr Patten said banks would still have to live within Reserve Bank loan-to-value parameters, which set a 10 per cent cap for any new lending on deposits of less than 20 per cent, though new builds were exempt.
He understood two other major banks were also preparing to drop deposit thresholds on apartment lending. The moves comes ahead of changes to Auckland Council's Unitary Plan that will allow more high-density housing and apartment developments, including a proposed reduction in the minimum apartment size from 35sq m to 30sq m for one-bedroom studios.
Westpac's conduct affected a total of 24,621 customers.