Driven by the Responsible Lending Code issued by the government in 2015, banks have tightened lending policies and are taking “an auditor’s approach to finance”, which requires brokers to provide more information about borrowers, according to LoanPlan Mortgages and Finance.
Despite first home buyers pitching in together with their parents and or siblings to buy a house together, getting finance is “tough because banks look for the weakest link”, director at Auckland mortgage brokers LoanPlan, Christine Lockie
“They want to know if each individual party in the deal can support the mortgage on their own if they had to, which can be impossible,” Lockie said.
She added that there have been more changes in the dynamics of mortgage finance in the past couple of years than in her almost 30 years in the industry. “Changing culture, changing bank policies, changing legislation, changes in financial structures and changes in people’s personal finance,” she said.
First home buyers are getting creative. For example, whenever eligible, they will access KiwiSavers benefits on top of support they get from parents’ equity in property and guarantees or gifts of funds.
Lockie said it requires at least two incomes to get anywhere in the Auckland market.
“Many parents are finding that upkeep of their properties, in terms of maintenance, insurance and rates, is getting tougher, so mum and dad are moving in with the children,” she said.
However, before making a pitch, people considering acquiring a home need to apply real thought and planning around what could go wrong – especially when a collaborative arrangement is being sought, Lockie added.