11 Aug 2013

More help for first home buyers

4:06 pm on 11 August 2013

The Government says it wants to make it easier for people to buy their first home, and so will make adjustments to the KiwiSaver home deposit scheme and the Welcome Home Loan programme.

Prime Minister John Key made the announcement at the National Party conference in Nelson on Sunday.

Mr Key said the Government will relax the criteria for KiwiSaver members wanting to access a first home deposit subsidy, worth a maximum of $5000.

The cap for the price of the house that can be purchased will rise. In Auckland it will go up from $400,000 to $485,000 and in other parts of the country it will increase according to regional market values.

The maximum a couple can earn to be eligible will increase from $100,000 to $120,000 a year.

The new house price and income thresholds being brought in for the KiwiSaver subsidy will also apply to the Welcome Home Loan scheme.

Under the Welcome Home Loan scheme, the Government underwrites loans for those who are eligible. It is designed for first home buyers who can afford to make regular repayments on a home loan but have trouble saving for a deposit.

To access either KiwiSaver or Welcome Home Loan funds, potential borrowers will have to have a minimum deposit of 10%.

At the moment there is no minimum deposit for the Welcome Home Loan for houses under $200,000. Above that, there is currently a 15% minimum deposit.

The loan scheme will be expanded to treble the number of loans from about 850 to 2500 per year.

Mr Key expects the number of people using the KiwiSaver scheme for a house deposit to double from 5000 to 10,000 per year.

He says the new rules are not targeted at people who already have enough money to get into the housing market.

"We are not helping wealthy people buy an expensive house, they can do that on their own. But we do want to help more people with low and moderate incomes get a foot in the door of home ownership," he said.

The total cost of the package will be $64 million over four years and will take effect from 1 October 2013.