New cost for first-home buyers with changes to First Home Loan
First-home buyers accessing the Kāinga Ora-administered First Home Loan will pay a higher fee from July 1.
The scheme allows borrowers to access loans with a deposit as small as 5%, if they earn less than $95,000 as an individual without dependents or $150,000 as a couple or single parent.
These loans do not fall under the banks' loan-to-value rules and borrowers can usually access bank special rates and do not have to pay the low-equity fees and margins that could otherwise apply.
Previously, borrowers had to pay lenders mortgage insurance of 0.5% of the loan amount. But from July 1, that increases to 1.2%.
Borrowers can pay it upfront or over the lifetime of their loans.
ADVERTISEMENT
The change applies to loans submitted after 1 July.
A spokesperson for the Ministry of Housing and Urban Development said the Government had agreed to cease its contribution to the mortgage insurance premium as part of the Budget.
"This change is expected to generate savings of $17.9 million per annum from 2025/26 onwards.
"These savings, along with others identified across the housing portfolio, will be fully reprioritised to support both existing housing services and the delivery of new initiatives within Vote Housing and Urban Development, including investments in social housing, transitional housing, and housing support services."
The ministry said that for an average first home loan of $550,000, it would increase the premium paid by the borrower from $2750 to $6600.
"This cost can be paid upfront or added to the loan, which would increase the total borrowing by approximately $3850.
"HUD does not expect that moving to a full cost recovery model will materially affect the uptake of first home loans or households' ability to reach home ownership relative to current settings.
ADVERTISEMENT
"The increase in cost is less than 1% of the average loan value and is not expected to significantly impact borrowers' ability to service their mortgage, meet deposit requirements, or access lending."
David Cunningham, chief executive at mortgage advice firm Squirrel, said it was a change that was "snuck in".
But he said it would not make a big difference to most borrowers.
"On a $400,000 loan that lifts the LMI from $2000 to $4800. Whilst the $2800 difference seems big, it is just part of the cost of establishing home ownership.
"Changes to interest rates are a much bigger factor as they impact every year rather than a one-off. With interest rates about 1.5% lower than they were a year ago and house prices a bit lower, first-home buyers are in a better position than a year ago, despite this change."
There were just over 5500 First Home Loans approved last year.
Jeremy Andrews, a mortgage adviser at Key Mortgages, said the change had come as a surprise.
ADVERTISEMENT
"I've done a heck of a lot of Kāinga Ora First Home Loans over recent years … a 0.5% fee was typically a no-brainer even when clients could have been approved with their main banks [with a] low deposit outside the scheme.
"There are still cases where it makes sense, as that's a one-off fee rather than typical ongoing margin until clients reach the sweet spot of 20% equity.
"It's also ironically the same 1.2% margin that BNZ charges their existing 'main bank' clients with between 5% under 10% deposit. BNZ, like most other banks, charges an ongoing low equity margin every year until clients can prove they have 20% deposit - and this might require an updated valuation to do so."
He said a benefit of the First Home Loan scheme was that people could usually be preapproved, and it was sometimes possible to get higher cashbacks from banks.
"There are several different lenders who can provide preapproval with Kainga Ora First Home Loans, each with pros and cons, such as considering either one or two boarders if applicable, turnaround time differences and varying rates and cashbacks. "
Karen Tatterson, Loan Market mortgage adviser, said the main banks were generally not issuing pre-approvals for low-deposit borrowers not part of the First Home Loan scheme at the moment.
"It means that the only time you can get an approval is if you are under contract on a property or going to auction on a specific property.
"It does cause a concern for first-home buyers as they cannot go to the market armed with a preapproval, and this creates some nervousness for them. The key is good advice and ensuring they speak to an adviser so they know their numbers."
rnz.co.nz
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scoop
17 hours ago
- Scoop
Fiji: 2025/2026 National Budget—A Socially Responsive Budget
27 June The Consumer Council of Fiji welcomes the 2025/2026 National Budget as a timely and decisive response to the financial strain felt by thousands of consumers across the country. This morning's Budget announcement can be seen delivering a meaningful relief through targeted measures that address the persistent cost-of-living pressures affecting households nationwide. A major highlight of today's announcement is the reduction of Value Added Tax (VAT) from 15% to 12.5%—a move set to ease financial pressures across the economy. This cut is expected to lower prices on essential goods and services, providing much-needed relief to households struggling with rising costs. The Council has long championed a fairer, consumer-focused tax regime, and this reform marks a positive shift toward alleviating the cost-of-living crisis. Consumer Council CEO Seema Shandil described the VAT reduction as both bold and necessary. 'This VAT reduction is a bold and welcome move,' she said. 'But now, the real work begins. For a long time, when VAT was increased, retailers were quick to pass on the added cost to consumers. Yet, when taxes are reduced, those savings are not always reflected on the shelves, instead, they're often absorbed as extra profit.' To address this issue and safeguard consumer interests, the Government has announced the establishment of a National Price Monitoring Taskforce. This initiative will bring together key enforcement agencies including the Consumer Council of Fiji, the Fiji Competition and Consumer Commission (FCCC), and the Fiji Revenue and Customs Service (FRCS). The taskforce will be responsible for ensuring that the tax and duty reductions are properly implemented by retailers and that consumers see the benefits of these changes in real terms. Ms. Shandil affirmed the Council's commitment to this effort, stating, 'We will be working shoulder-to-shoulder with our counterparts at FCCC, FRCS, and the Ministry to strictly monitor retail pricing. This is not a time for complacency. The Fijian people deserve to feel the full benefit of these decisions, and we will ensure that happens.' The Budget also includes significant reductions in import duties for a range of essential food items. Chicken portions and offals such as giblets and liver will now attract a reduced duty of 15 percent, down from 32 percent. Duty on fresh fruits and vegetables — including tomatoes, cabbage, lettuce, cucumber, eggplant, pumpkin, bananas, avocados, mandarins, watermelons and pawpaw remains at five percent. Other fruits and vegetables such as apples, carrots, grapes, mushrooms, celery, broccoli, and nuts will also remain duty free. Potatoes, garlic, onion, tea, and cooking oil will continue to be duty-free as well. Meanwhile, frozen fish, including salmon, and canned fish products will also see duty eliminated entirely. Ms. Shandil emphasized that these reductions have the potential to significantly improve household nutrition and food affordability. 'These are real changes with the potential to impact the nutritional security of families. With key staples now cheaper to import, we expect retailers to bring down prices accordingly, and we will be watching closely.' In addition to food and tax relief measures, the Budget also includes targeted support in other areas that directly affect consumers. A ten percent bus fare subsidy can also be seen to help ease the financial burden on daily commuters and support lower-income earners who rely heavily on public transportation. This subsidy acts like a small "pay raise" by reducing their cost of living. A 10% reduction directly cuts daily transport costs, leaving more money for other expenses. Furthermore, a VAT refund scheme has been announced for residential construction projects valued up to $120,000. This measure is expected to reduce construction costs and encourage more families to invest in building or upgrading their homes. The newly implemented progressive measures, designed to support vulnerable populations and foster healthier living, represent a positive step forward. A 5% monthly increase for social welfare recipients and government pensioners will enhance financial resilience amid rising living costs. Simultaneously, the elimination of the 15% duty on no-sugar-added juices makes nutritious beverages more affordable, encouraging healthier consumption habits. Conversely, the new 15% duty on unhealthy processed snacks like puffed chips serves as a deterrent against excessive consumption of these foods. Together, these policies demonstrate a balanced approach to economic relief and public health improvement, helping build a more secure and health-conscious society. Whilst the Consumer Council reiterates its support for the budget's direction but stresses that the implementation phase will be critical, retailers are urged to pass on every cent of the savings to their customers. The Council will not hesitate to take action against non-compliance. Consumers are also encouraged to remain vigilant and report any instances where price reductions are not being honoured after the measures take effect. Complaints can be made through the Council's toll-free helpline 155 or via its email platform complaints@
NZ Herald
18 hours ago
- NZ Herald
Never mind the swear words, politicians need to raise debate quality
I don't believe people are genuinely shocked by the language we're all hearing every night on our streaming TV shows. What is shocking is the standard of argument being employed by politicians and parties as they seek to score points with silly populist arguments. On my Facebook and Instagram feeds, the Labour Party has been trying to tell me that the Government is to blame for soaring butter prices. It has posted a chart of butter prices pointing out that they have doubled since the National-led coalition came to power. That's annoyed me on a number of levels. Despite the fact it seems to enrage many Kiwis, soaring dairy prices are clearly a net gain for the economy. We sell a lot more internationally than we consume locally and the current dairy price spike is expected to bring in an additional $10 billion in export revenue over this year and next. It's exactly what our economy needed. The impact on consumers is overstated. Butter prices have doubled in two years. You used to be able to get a 500g block for about $4.50 now it's about $8.50. That's an extra $4 a week, far less than petrol prices fluctuate on a regular basis. Also, there are numerous butter substitutes and blends that haven't risen nearly that much. I understand why someone on the Labour Party team has tried to milk the dairy price story (sorry for the pun). It is a headline grabber and an easy online meme. I bet the analytics on it look great. But it makes no sense in the real world. The Government has no control over international dairy prices. There are things a government could do to reduce the cost of butter for local consumers. They could subsidise the price with taxpayer money. Or they could impose price controls on farmers and force them to sell a certain amount locally. These would be terrible policies, and there is no chance Labour is about to adopt them. So butter prices would be exactly the same right now if they had won the last election. More broadly, inflation is running rampant like it was throughout 2021 and 2022. It has edged up to 2.5% but remains within the Reserve Bank's 1-3% target band. The same Stats NZ release that included the butter price graph also pointed out that annual rent price increases haven't been below 2.8% since 2011. Of course, much lower inflation isn't all good news. The fact it is underperforming so badly is giving economists confidence that inflation will stay subdued. The economy is struggling to get any momentum and there is no doubt a lot of people are doing it tough. There's no shortage of real issues with this recovery, which the current Government ought to take some responsibility for. Labour could legitimately be attacking the Government on unemployment and job security. There are tens of thousands more people on the Jobseeker benefit now than there were when Labour was in power. I don't mean to single out Labour either. The National Party spent a lot of time in opposition attacking Labour for letting those Jobseeker numbers rise. It also drives me crazy when the Government holds press conferences after the Official Cash Rate announcement to take credit for falling interest rates. Interest rates are falling because inflation is under control and the economy is underperforming. If they go much lower, it will be because things are getting worse, not better. Meanwhile, in the past week, we've had David Seymour running 'victim of the day' social media attacks on opponents of his regulatory standards bill. Seymour says he is being 'playful' and having 'fun' with his line, suggesting opponents are suffering from 'Regulatory Standards Derangement Syndrome'. Surely if the bill is worth putting before Parliament, then it must have been aimed at delivering some sort of meaningful change to the status quo. Let's have a grown-up debate about what that intended change is. What's frustrating about political debate in 2025 is that politicians are so quick to build 'straw man' arguments because they seem easy to sell as memes and headlines. A 'straw man', for the record, is where you present a weak version or flawed version of your opponent's argument so you can easily dismiss it. It's lazy and doesn't do anything to boost the quality of policy-making in this country. It's probably too much to ask, but wouldn't it be nice if our politicians were confident enough in their view to employ the opposite of a 'straw man' argument? That's called a 'steel-man' argument. It requires you to consciously present the strongest and most charitable version of your opponent's argument. Then you explain why it still doesn't stack up. It requires you to do a bit of homework and think through the logical basis for your argument. I'm pretty sure all the leaders of our political parties are smart enough to do that. But we seem to be following a depressing international trend which sees social media debate reduce everything to simplistic points which appeal to an increasingly tribal political base. New Zealand has a cyclical recovery underway that would have happened, at a greater or lesser pace, regardless of who was in power. Scrapping over that is pointless. We need to be looking ahead to how we lift the economy at a structural level and enable higher levels of cyclical growth. That requires some serious work and will need a higher quality of debate than what we've been seeing this year. This column will take a two-week break as the author is on holiday with his family. Liam Dann is business editor-at-large for theNew Zealand Herald. He is a senior writer and columnist and also presents and produces videos and podcasts. He joined theHeraldin 2003.
Scoop
a day ago
- Scoop
Australia: Less Bang For Your Buck – NSW Budget Is Missing Key Opportunities For Everyone
We've crunched the numbers and can show that the financial cost of discrimination and exclusion is far higher than the costs associated with investing in inclusion. 'Despite repeated calls from people with disability, the NSW Government has failed to deliver a clear and sustained investment in disabled lives in the 2025-26 Budget, the outcomes of which will be felt by all,' said Trinity Ford, President, People with Disability Australia (PWDA). The key messages from PWDA's pre-budget submission are that making NSW more inclusive and accessible offers: Wellbeing benefits for people with disability. Wellbeing benefits for the wider community. Opportunities to save over $12 billion. These key benefits and opportunities have not been considered throughout the Budget. A targeted investment in Foundational Supports was clearly missing—and that's deeply concerning. "The complete omission of any specific funding for Foundational Supports is a serious missed opportunity—and one that Australia can't afford. We are increasingly concerned that this may signal a deliberate move to sideline foundational supports from the Government's agenda. We will be raising this urgently with Minister Washington and will be monitoring the Government's position closely', said Ms Ford. A commitment to accessible housing is also lacking within announcements. Although the Government has committed to improve housing for the people of NSW, PWDA is disappointed the Budget does little to directly address the housing crisis facing people with disability. Currently, 66,698 households are on the NSW social housing waiting list. The government's own data acknowledges that around one-third of these applicants are people with disability. The Government is committing billions to fast-track 465,500 new homes over the next five years through private and mixed development initiatives. However, most of these are not social or accessible housing, and there are no clear guarantees of how people with disability—especially those on low incomes—will benefit. "Making all new homes accessible by mandating the National Construction Code's minimum accessibility standards would not cost the government anything—and it would help more people with disability live independently, instead of relying on social housing', said Ms Ford. Right now, homelessness is costing NSW about $6.5 billion every year. Over 10 years, that adds up to $65 billion. If the Government invested just one-third of that amount—$26 billion over 10 years—it could stop many people from becoming homeless and save almost $4 billion each year. PWDA welcomes the NSW Government's investments toward improving access to support for victim-survivors of violence and trauma. However, there is no mention of how these funds will support people with disability—despite clear evidence people with disability are at significantly higher risk of experiencing violence and need different interventions. 'Funding responses to violence must be inclusive. Without specific measures to address the unique risks and access barriers faced by people with disability, we risk leaving behind the very communities most in need of protection,' said Ms Ford. PWDA is calling on the NSW Government to commit to the inclusion and wellbeing of people with disability. 'Continued discrimination against people with disability, and doing nothing to address it, is expensive. There are clear gaps in the 2025-26 NSW Budget. People with disability are being left out, which will end up costing the Government and taxpayers more in the future,' said Trinity Ford, President of PWDA.
