National is promising to help more people buy their first home by expanding access to the government’s low-deposit scheme, if it’s re-elected.
The existing First Home Loan scheme run by Kāinga Ora allows buyers to purchase their first home with a 5 percent deposit, rather than 20 percent which most banks require.
If elected, National would increase the income threshold so anyone earning less than $300,000 combined could access it – whether that was single income or combined income.
Housing spokesperson Chris Bishop said many would-be first home buyers could afford to service a mortgage, but struggled to get together a deposit.
Chris Bishop.
RNZ / Mark Papalii
The scheme’s current cap of $95,000 for single buyers with no dependents, or $150,000 for multiple buyers or single buyers with dependents, was too restrictive, he said.
The caps were last updated in 2022.
“Right now, a junior doctor on $100,000 can’t access the scheme. Nor can a young couple, like an electrician on $85,000 and a teacher on $78,000, or two friends who have just graduated from police college and are earning $77,000 each,” he said.
Around half of first-home buyers earned more than $146,000, said Bishop.
“So, while a combined income of $150,000 might sound like a lot of money, the reality is that plenty of young couples now earn more than that but still struggle to save for a 20 percent deposit while juggling the cost of rent, food, and childcare.
“National’s changes will address those pressures and build on the work we have done in government to support more people into home ownership.”
The loans are issued by some banks and other lenders, and underwritten by Kāinga Ora, allowing lenders to provide loans it otherwise would not.
Bishop said National’s long term goal was to boost the home ownership rate to 74 percent, up from 66 percent currently.
He said the policy would see “thousands” more applicants accessing the scheme, but would not give a specific number.
Of 25,000 first home buyers last year, 4000 accessed the scheme, Bishop said.
“We do expect by widening the eligibility, thousands more will use it.”
The coalition in 2024 scrapped Labour’s First Home Grant, which gave eligible applicants up to $10,000 towards purchasing their first home. https://www.rnz.co.nz/news/politics/517499/government-confirms-first-home-grants-to-be-scrapped
Bishop said National’s policy was more effective.
“Giving people an amount of money in cash… was a very blunt and ineffective way of actually helping,” he said.
“This goes to the biggest barrier that we see that young people face getting into the housing market which is getting that deposit together.”
The party estimated widening access to the First Home Loan scheme would cost between $4 million and $6m, funded from existing baselines.
The scheme cost $14.5m to administer during FY2024/25 which included the cost of the government subsidising Lenders Mortgage Insurance, it said.
But in Budget 2025, the government substantially reduced its costs by requiring borrowers to meet the full cost of Lenders Mortgage Insurance.