Help for First Home Buyers

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Boost for First Home Buyers: Increased Support for Low Deposit Purchases

In a positive development for aspiring homeowners across New Zealand, the government has announced an expansion in support for first home buyers seeking mortgages with less than a 20% deposit. Currently, lenders are permitted to allocate 15% of their total lending to this group. However, effective immediately, this allocation will increase to 20%. This policy adjustment is poised to make homeownership more accessible for many New Zealanders who have faced challenges in saving for a larger deposit.

Understanding the Policy Change

The increase in lender allocation means that a larger portion of mortgage funds can now be directed towards first home buyers who have less than a 20% deposit. This group typically faces higher barriers to homeownership due to stricter lending criteria and the requirement for mortgage insurance, which is often mandatory for loans exceeding 80% of the property's value.

Rationale Behind the Adjustment

The decision to enhance support for low deposit first home buyers is driven by several key factors:

1. Improving Affordability: By allowing lenders to allocate a higher percentage of their lending to low deposit buyers, the government aims to reduce the financial hurdles that often prevent young families and individuals from entering the housing market.

2. Addressing Market Dynamics: The adjustment is designed to stimulate housing market activity and increase competition among lenders, potentially leading to more favorable terms and conditions for borrowers.

3. Promoting Economic Stability: Facilitating homeownership among first-time buyers can contribute to long-term economic stability by fostering household wealth accumulation and reducing rental dependency.

Impact on First Home Buyers

The policy change is expected to have several immediate and long-term benefits for first home buyers with less than a 20% deposit:

- Increased Access to Financing: More prospective homeowners will have access to mortgage loans with a lower upfront deposit requirement, enabling them to purchase a property sooner.

- Reduced Financial Pressure: Buyers may experience reduced financial strain associated with saving for a larger deposit, allowing them to allocate resources towards other priorities or investments.

- Market Participation: Greater participation of first home buyers can contribute to a balanced and inclusive housing market, benefiting both buyers and sellers alike.

Stakeholder Reactions

The announcement has been met with positive responses from various stakeholders:

- Real Estate Industry: Industry experts anticipate an uptick in market activity and increased demand from first home buyers, which could lead to improved market sentiment and transaction volumes.

- Consumer Advocates: Advocacy groups applaud the government's initiative as a step towards enhancing housing affordability and equity in access to homeownership opportunities.

- Government Officials: Officials emphasize the importance of supporting first home buyers as a means to promote social mobility and economic resilience.

Implementation and Future Considerations

As the increased allocation takes effect, stakeholders will monitor its impact on the housing market and broader economy:

- Monitoring Market Dynamics: Observing how lenders adjust their lending practices and the effect on property prices and affordability in different regions.

- Ensuring Responsible Lending: Continued oversight to ensure that increased lending to low deposit buyers remains sustainable and does not lead to excessive risk-taking.

- Long-Term Housing Policies: Evaluating the effectiveness of the policy change and exploring additional measures to support sustainable homeownership and housing market stability.


The decision to increase lender allocation for first home buyers with less than a 20% deposit represents a significant step towards enhancing housing affordability and accessibility in New Zealand. As more prospective homeowners benefit from this policy adjustment, it is expected to contribute positively to economic growth, social equity, and the overall stability of the housing market. Aspiring homeowners are encouraged to stay informed about these changes and consult with financial advisors to navigate the evolving opportunities in New Zealand's housing landscape.