Surge in KiwiSaver withdrawals for first home-buyers

Andrew and Katrina McLay used KiwiSaver to buy their first home in Okura on the North Shore. Photo / Jason Oxenham

Banks say many more first-home buyers have passed threshold to use scheme to get them into a property.

Mortgage lenders have noticed an upswing in the number of people withdrawing money from KiwiSaver for a first home.

John Body, ANZ Wealth managing director, said 1248 of the bank's customers used money from the national scheme for a house withdrawal in 2012. At the end of last year, another 3890 had withdrawn funds.

KiwiSaver was seven years old so more people were passing the three-year threshold, after which they could apply to withdraw most of their savings.

"Many more people are actively planning to do this over the next year," he said, citing an ANZ survey of 850 KiwiSaver members who intend to buy their first home in the next decade.

That survey found 89 per cent of respondents planned to make a first-home withdrawal from their KiwiSaver fund and 60 per cent intended to do so in the next five years.

It also showed most people include buying a family home as part of their retirement planning.

An ASB spokeswoman said by the end of January, the bank had processed 8293 first-home withdrawals for the ASB KiwiSaver Scheme.

"To put that in context, total ASB KiwiSaver Scheme membership on January 31 was 449,668," she said.

A BNZ spokeswoman said staff had also noticed a rise in inquiries.

Although unable to provide figures last night, a spokeswoman for Westpac said: "The volumes of first-home withdrawals from the Westpac KiwiSaver Scheme are certainly increasing and we expect this to continue."

Kiwibank was unable to provide figures last night.

House-hunters can withdraw part or all of their KiwiSaver contributions for a first home, as well as employer contributions, if they have been a member for at least three years.

Buyers must intend to live in the property.

If you've owned a home before, you may be able to make a withdrawal if you have earned income of $80,000 or less in the last 12 months.

"People seem to be a lot more educated in their entitlements now and, with so many having joined the scheme, there are more and more ticking over the three-year term to become eligible," mortgage broker Bruce Patten of LoanMarket said.

Colleen Milne, chief executive of the Real Estate Institute, said agencies reported that it was still a difficult market in Auckland for first-home buyers "due to the high median price and we welcome the changes to the First Home Ownership Scheme due on April 1 which will assist".

Savings cash welcome boost for buyers

Auckland couple Andrew and Katrina McLay withdrew money from his KiwiSaver account to get their first Auckland home on the North Shore.

"I entered KiwiSaver when it began as a replacement for our existing company superannuation scheme," Mr McLay said. So he had been in the scheme long enough to be eligible.

They searched in the $500,000 to $600,000 price bracket and eventually got a three-bedroom standalone house which they are delighted with.

He is pleased contributions come out before he gets paid, meaning he is unable to spend the money and forgets about it. "It's a nice surprise when you remember, check the balance and discover you've got thousands more than you thought."

Buying a home with KiwiSaver

•If you have been a member of KiwiSaver for at least three years, you may be able to withdraw all or part of your savings, and employer contributions, to put towards buying your first home.

•You must intend to live in the property. KiwiSaver cannot be used to buy an investment property.

•If you've owned a home before but you no longer do, you may still be able to make a savings withdrawal. Housing New Zealand will determine your eligibility based on your circumstances.

•People who make a first-home withdrawal will not be able to use the Government contributions, including the $1000 kick-start from when they joined the scheme.

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