A director of New Zealand's largest mortgage broker says the Reserve Bank's strategy of discouraging low deposit first-time home buyers is starting to bite.
The Reserve Bank says there has been a substantial fall in mortgage lending to those with small deposits, but it is still to early to know whether it has slowed an over-valued housing market.
In October this year, the central bank introduced new rules to restrict riskier loans to just 10% of new lending to protect the financial system in case of a shock to the economy.
Excluding exemptions, the bank says lending to those with a deposit of less than 20% fell to 12% of total new lending in October compared with 26% in September.
The new figures are from a survey of banks implemented earlier this year to collect better quality data on low deposit loans.
Loanmarket handles about two-thirds of the home loans in Auckland that go though brokers. Director Bruce Patten says there has been a decline in interest.
Mr Patten said while his company is still providing loans, when compared to the percentage of the whole market it is relatively small.
He said most first-time buyers do not know where to go to access non-bank lenders and the number of brokers who have access to those that lend over 80% is limited.
Real estate agents are reporting much quieter open homes, but it is too early to tell whether the changes will slow down rapidly rising house prices, he said.
Prime Minister John Key said on Thursday the latest update on new home loan lending rules shows that banks are complying and reducing the number of loans with low deposits.
However, Mr Key said banks are still lending about $3 billion a month, and in October, there was still a relatively large number of new building consents.
Reserve Bank deputy governor Grant Spencer said retail banks are well-placed to meet the new target and this will help reduce the risk of a sharp fall in house prices which could damage banks' financial position and the economy.