PM discusses supermarkets, superannuation, and housing

Christopher Luxon has defended a move to make first-home buyers pay more under a government-assisted loan scheme, saying it hasn’t impacted the number of applications.

At the weekend, National promised – if reelected – to help more people buy their first home by expanding access to the government’s low-deposit scheme.

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. National wants to increase the income threshold so anyone earning less than $300,000 combined could access it – whether that was a single or combined income.

The existing cap of $95,000 for single buyers with no dependents, or $150,000 for multiple buyers or single buyers with dependents was set in 2022.

“When you step back and think about the young people that we want to keep here in New Zealand, this is one way we can help support them,” the National Party leader told Morning Report on Monday, saying it would allow people on slightly higher incomes such as “junior doctors and electricians and teachers and nurses and police” use it.

Last year the government scrapped its contribution towards the mortgage insurance premium, raising costs for low-deposit borrowers from 0.5 percent of the mortgage’s total cost to 1.2 percent – nearly $4000 on average.

“We felt that was a better way to go, just making sure the mortgage lender insurance is a key component of it. But as you can see, it actually hasn’t changed, people becoming eligible for it and people applying for it over the last nine months.”

Kāinga Ora approved 7761 new First Home Loan applications between 1 July 2025, and 30 April 2026. Purchases using First Home Loans rose 31 percent in the year to June 2026, Infometrics statistics showed, to just over 4000.

Ministry figures show the share of purchases made by first-home buyers has crept up to just over 35 percent in the past year – down on 2023’s peak at almost 40 percent, but well above 2017’s 21 percent.

“The issue is now not so much about the serviceability of the mortgage because actual interest rates having come down, that’s much more affordable for people. It’s really about helping people get that deposit together.”

While interest rates were creeping back up now, with two successive hikes to the official cash rate, two years ago they were as high as 5.5 percent.

Luxon said inflation had come down since the coalition took over, which would encourage Kiwis to stay here, or come back if they had already left.

Inflation’s latest figure was 4.1 percent, a two-year high and well outside the Reserve Bank’s target of 1-3 percent, hence the interest rate hikes.

Luxon said if you ignored the effects of the Middle East conflict, inflation was inside the target band, at 2.9 percent. He also pointed to food price inflation being at 1.9 percent.

Luxon said inflation was previously above 7 percent, without mentioning potential global causes such as the supply shock caused by Covid-19, or that it was just as high for most of our major trading partners.

“Having inflation in the band at a healthy level as it has been in New Zealand for a number of years is a good thing, because that means interest rates come down, interest rates lower inflation, lower interest rates means the economy starts growing and people get into jobs.”

‘Nudge’ in favour of first-home buyers

Mortgage expert discusses National’s new first homebuyer policy

Squirrel Mortgage Brokers chief David Cunningham told Midday Report the proportion of first home buyers entering the property market had been rising for five to seven years, but the National policy could act as a further “nudge” in that direction.

He said the policy was “using or a scheme that already exists and really extending it to a broader group of people, which basically means more young people can own their own homes and get into them faster”.

The current settings for the scheme did not really make sense, he said, but with house prices falling the market was already opening up.

“It’s been rising for about five, six, seven years now,” he said. “I’ve described the last year or two as a ‘Goldilocks time’ for first-home buyers and it continues to be that way… it’s about 30 percent of all house sales to first home buyers at the moment… this sort of gives it another little I suppose, nudge.”

He said because it was a loan it was good fiscal policy because it was not a “giveaway”, and borrowers would have to be able to afford to pay it back.

Buyers would also be at risk of falling into negative equity, where they owed more than the house was worth, but would not be forced to sell and the Reserve Bank would continue monitoring the system’s stability.

“They’ve put in place loan-to-value ratios – in other words, how much you can borrow over that 80 percent level… and debt-to-income ratios which came in more recently, and those sort of control how much risk there is in the system.

“The system-wide stability has got good guardrails… so, you know, this is very targeted.”