100% mortgage: Could you borrow cost of a home in NZ?

A British bank has launched a 100% mortgage - could it happen here too? Photo / Getty Images

First-home buyers in Britain are being offered the ability to borrow the entire cost of their new home again, but a New Zealand broker says it is unlikely to happen here.

Lloyds has brought back the 100 per cent mortgage - an offer that hasn't been made since before the global financial crisis hit in 2008.

The offer comes with a catch: a family member of the buyer has to put up savings to the value of 10 per cent of the property and leave the sum in the bank for at least three years.

But even after three years a borrower could be left with a mortgage greater than the value of their property if house prices drop - a real possibility with Brexit looming.

Mark Collins, chief executive of Mike Pero Mortgages, says 100 per cent mortgages have been available here in the past but he doubts they will return.

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"In our view it's highly unlikely.

"The introduction of responsible lending in New Zealand makes this almost an impossibility."

Collins said even in good times those mortgages were risky.

"Any default may incur default interest and any change in client circumstances, such as loss of job or change of lifestyle, may mean they can't pay the mortgage and there is no room for mortgage holidays because so little principal is paid in the early years of a table mortgage."

Collins said the New Zealand financial services industry tended to be more conservative than global markets because of the risk of financial shocks from outside the country.

"So we're unlikely to adopt mortgages to this level on a market-wide scale."

Collins said those kinds of mortgages had been available in New Zealand in the recent past but only on a small scale and not through the main trading banks.

He warned the rise of those types of loans seemed to coincide historically with the top of the economic cycle, making the risk even higher.

"I would be very nervous," he said of the loans.

But the good news is there may be other options for home buyers.

"Borrow from family, reduce your expectations with respect to the house and area you want to live in, save more for a deposit, use your KiwiSaver.

"Ultimately, we would be very wary of recommending these types of loans to people without a true understanding of the customer's circumstances, the risks, and the market."