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Major banks are changing their mortgage lending policies

Significant changes are happening with 3 major banks that might interest savvy homebuyers

Yep, the current unfavorable interest rates are causing banks to jostle for the limited business available in the New Zealand home loan market.

So, what is the big news from the banking world? ASB, ANZ and Kiwibank are shaking things up with some exciting changes to their lending policies. These three big hitters have announced that they are bringing back pre-approvals for folks looking to purchase a “owner occupied” property where their total deposit is less than 20%. Previously, they were all about that 20% down payment but now they are opening the door wider for eager first home hunters. What does owner occupied mean? Well, it simply means that the property is being purchased with the intention it is yours to live in. Previously, only customers who qualified for Kainga Ora’s First Home Loan or new builds that fell under the Reserve Bank loan-to-value restrictions could access pre approvals. But not anymore.

Young couple celebrating buying a house and holding the keys

Before you start picturing your new digs, let’s look at the criteria each bank has set out for these <20% pre-approvals.

ASB require at least one applicant to have held an active KiwiSaver with them for the last 12 months or more, or a transaction account for at least 3 months.

ANZ require at least one applicant to be a customer of the bank for at least three months. Who do they consider a customer? Someone who has their wages or salary paid into their ANZ bank account, someone who has an active ANZ credit card or someone who has an active KiwiSaver account for at least three months.

And finally, Kiwibank. They also state that at least one applicant is a customer of the bank for a minimum of three months and has their wages or salary credited with the bank.

Now, before you go running to the bank with a suitcase full of dreams, keep in mind that not all the big names are on board with these changes. BNZ and Westpac are currently sticking to their guns when it comes to pre-approvals for over 80% lending, except for certain situations like snagging a shiny new turn-key build.

So, what if you don’t qualify for any of the participating bank’s criteria and you haven’t quite mustered that 20% deposit… is getting on the property ladder a step too far away? Not always. A buyer can get an offer accepted on a property, without pre-approval, with certain finance conditions in place. Banks refer to this situation as a “live deal” and the buyer can lock down their dream home financing once they’ve got that signed Sale & Purchase Agreement in hand.

A model house on a table surrounded by coins

With this new wave of competition, banks are offering some great perks to attract the wannabe or existing home owners to them. Most banks are offering cashback deals of up to 0.90% of your lending amount for new or refinanced loans. Translation: if you're borrowing $850,000, you could be looking at a sweet $7,650 cashback when you make the switch. Cha-ching! If you've been loyal to your current bank for the past three years and you've got some fixed loans up for renewal, it might just be worth your while to do a bit of window shopping or asking a mortgage broker for help. You never know, you might find an even better deal out there!

So, there you have it. Exciting times in the world of lending. If you want to dive deeper into these changes or have any questions about snagging that dream home, don't hesitate to reach out to the Naked Finance team. We're here to help you make those homeownership dreams a reality!


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