Reserve Bank might relax KiwiSaver kick-start rules
The Government is considering changes to the rules on using KiwiSaver for a first home deposit, housing minister Nick Smith has confirmed.
The Reserve Bank is weighing up restrictions on how much banks can lend to home buyers to cool the market. The proposals have attracted criticism that it will make it harder for first-time home buyers to get on the property ladder.
Dr Smith yesterday indicated the Government is reviewing the criteria that allows KiwiSaver holders to withdraw savings to buy a house. He indicated income caps (of $100,000 per year for two people) and house price limits (of between $300,000 and $400,000) on the start-up help may be revised.
"I'm worried that the income thresholds and household thresholds have not been shifted for some years, and as a consequence, that's a barrier," Dr Smith told TVNZ's Q + A yesterday morning.
"I'm having a fresh look at that, and we may make some moves in parallel with the Reserve Bank around where those thresholds are to make it easier for home buyers as we try and deal with this bigger problem."
The maximum house price is $400,000 in Auckland, Queenstown, Selwyn and Wellington - and Dr Smith argued it is difficult to buy a home in that bracket in Auckland. He said the criteria must be realistic and the Government needs to respond to changes in the market.
Under the RBNZ proposals, banks must restrict the number of loans they approve with deposits of less than 20 per cent.
Head of the Bankers' Association, Kirk Hope, yesterday warned the restrictions may force some home buyers to seek out loan sharks or high interest lenders. He cited Canada and Sweden, which have introduced caps and seen first-time buyers access the unsecured lending market to build up a deposit.
However, he supported a move to shake up KiwiSaver criteria to help first-home buyers.
Dr Smith said he is confident the Government and RBNZ will ensure "a package that works well for both the NZ economy and for those aspiring young families that want their own home".
But Labour hit out at the move, saying the Government is punishing first-time buyers "by cracking open more of their retirement savings."
Struggling first-time buyers "face hefty minimum deposits, forcing them to crack open their retirement savings or turn to loan sharks," he said.
Labour wants a temporary exemption for first-home buyers on the proposed restrictions until supply in the housing market improves.
The Dominion Post