A growing number of first home buyers are using alternative pathways to purchase their first home, but many still aren’t aware of the range of options available to them, according to Westpac NZ data.
The bank has helped first home buyers purchase more than 11,000 homes in the past two years.
In the last 12 months, around one-third used a low-deposit finance option such as Kāinga Ora’s First Home Loan programme, a shared equity arrangement, or Westpac’s Family Springboard offering that allows customers to use equity in the family home as part of their deposit. That compares to one-quarter using a low-deposit option in the previous year.
Westpac NZ General Manager of Consumer Banking and Wealth, Helen Ryder says the homebuying process can be daunting, but home ownership could be closer for many people than they may think through the use of innovative pathways, which are growing in number.
“Owning your own home usually brings long term financial, social and wellbeing benefits. We’re working hard to give customers the confidence and knowledge they need to get on the ladder, as well as innovative products to help get them there sooner,” Ms Ryder says.
“Elevated house prices and interest rates are a challenge, and customer research tells us that a lack of knowledge about the options available and difficulty saving for a 20% deposit are major barriers. The good news is there are still plenty of options to boost first home buyers’ purchasing power.
“It’s pleasing to see that more and more customers are taking up these pathways, but we know from Westpac survey data that less than half of prospective first home buyers are aware of these great options.”
This week, Westpac is launching its “First Home Sooner” programme to help aspiring first homeowners understand the options available to them, such as:
- First Home Loan: Purchasing a first home with as little as a 5% deposit, by having your loan underwritten by Kāinga Ora.
- Shared Equity through an equity partner, such as a community housing provider or iwi organisation.
- Family Springboard: Using family support through a co-borrower or guarantor structure.
- Buying a new build, which is exempt from high loan-to-value ratio (LVR) restrictions.
- Applying for a high LVR loan with less than 20% deposit with no additional support.
- Buying with family or friends.
Ms Ryder says Westpac has a large range of potential pathways for first home buyers and she encourages aspiring first home buyers to talk to their bank about their home ownership goals.
“We have a nationwide network of home loan experts who are local, understand the uncertainties many first home buyers feel, and most importantly they have the know-how to support them every step of the way.
“Having a trusted partner who knows all the avenues to home ownership helps give our customers confidence and brings all the excitement and benefits of home ownership closer within reach.”
While the pausing of Kāinga Ora’s First Home Partner scheme has cut off one shared equity option, Westpac is working hard with iwi and community groups who offer similar schemes and has helped more than 500 customers purchase homes through alternative housing arrangements such as shared equity and leasehold models.
“Getting more New Zealanders into their own homes requires finance and housing providers working together with policy makers to remove barriers to home ownership, and we’re proud to be leading in this area,” Ms Ryder says.
