Doors reopening for first home buyers

The garden gates have been firmly padlocked, and with every passing year, another deadbolt may as well have been installed on the front door.

For a long time, first-home buyers have been increasingly locked out of the housing market by price caps, high deposit requirements and rising purchase prices.

But as of July 2022 when this article was written, some of those barriers have been removed, and doors are finally reopening for first-home buyers. 

This is partly due to the overhaul of the Kainga Ora First Home Loans Scheme.  The price cap – previously set at a very tight $500,000 for this area – has been completely removed, and a new income category has been established for solo parents with dependent children.

The First Home Loan packages are complex products, with lots of moving parts. They allow customers to purchase their houses with low deposits of 10 or even 5%, instead of the usual 20%.  Not all banks offer First Home loans, and it is prudent to have someone on your side who knows the ins and outs of the documentation and possibilities.

Stuart Pope, mortgage broker for Castle Trust Financial Planning, said that the price caps had severely limited the pool of houses for first-home buyers, and he was pleased that the changes would enable a lot more people to get into their first home.

“It’s a significant change from what the situation was.”

He described the First Home Loan products as “very specialised” and encourages potential buyers to reach out and receive help to put their loan requests together.  There is no cost for the customer in utilising Castle Trust’s brokerage services.

“We know exactly the information we have to collect from the customer, and which banks offer the different products,” he said.  The Castle Trust team also knows which banks will be the best and most receptive fit for potential home buyers and their individual situations.

This was the case with Umesh and Shayla, who met Stuart at an event in Nelson and later enlisted his help to work through the First Home Loan process.  Speaking from their new home in Hawkes Bay, Umesh said that working with Stuart made their application process much more simple, which meant that they could focus on the other important things in their lives.

Umesh was pleased to have Stuart’s expertise on tap, as the process is “definitely complicated unless you have a good level of financial knowledge”. 

“It was like working with a friend,” he said. “We were definitely grateful to have him on our team.”

Interest rates are higher than a year ago, when Covid completely disrupted the market, but compared to the last 20 years, they are still historically low.  There is more housing stock on the market now than in the last few years, giving potential buyers a chance to make a considered decision.  Also, prices are finally stabilising.

Stuart says that now is a great time for first-home buyers to look at their options.

“The changes will open the door for a lot more people who would normally be closed out.”

To have a conversation about your first-home finances, email Stuart at mortgages@castletrust.co.nz, or pop into the Castle Trust office on Motueka’s High Street.  

– By Elise Vollweiler