22 Jul 2013

First-home buyers dashing to secure loans - brokers

6:56 am on 22 July 2013

Mortgage brokers are reporting a large influx of first-home buyers wanting to arrange finance before the Reserve Bank imposes restrictions on banks lending to people will small deposits.

The Professional Advisers Association said the mortgage brokers her association represents can help such people, perhaps even finding ways to increase the size of their deposits.

General manager Jenny Campbell said it's a good idea for buyers to get their finances in order now as pre-approvals last for a good period of time.

But the organisation is also concerned the policy may have unintended consequences.

"We thought it was a very blunt tool to try and cool a property market that's really only hot in two areas - and that's of course in Auckland and Christchurch," said Ms Campbell.

She said steeply-rising house prices in those two areas is a supply and demand problem and not a problem of high LVR loans or easy credit.

"The idea that high LVR loans are inherently risky we believe isn't entirely true. When you're in a housing crisis for example, the risky loans are the loans where people don't have income."

Ms Campbell said a good borrower is one that can afford to re-pay and first home buyers are some of the safest people to lend to because they often have a good capacity to repay debt.