House hunter hopes to hold on to dream

LYN HUMPHREYS
Last updated 05:00 17/07/2013
Karen Taylor
ANDY JACKSON/Fairfax NZ

REAL ESTATE: Karen Taylor is worried the Reserve Bank's new lending restrictions could put her first home out of reach.

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First-home hunter Karen Taylor is waiting with bated breath to find out if the Reserve Bank plans to crack down on risky loans will scuttle her dreams.

An advertising sales consultant, Ms Taylor, 34, is now a New Zealand resident after emigrating from Britain.

Although she has qualified for the Government-backed Welcome Home Loan - which is restricted to first-home owners - she is struggling to find a suitable New Plymouth house in her $200,000 to $230,000 price bracket.

Ms Taylor is now waiting nervously after news that the Reserve Bank intends to announce new rules this week aimed at reining in riskier mortgages.

The measures are believed to be aimed at making it harder to get a mortgage with a deposit of less than 20 per cent.

In New Plymouth, the loan criteria allowed the purchase of approved houses up to $280,000, which would require only $12,000 as a deposit, she said.

"But the property has to be sound. Although it's high-risk lending, it's low-risk property." She praised the Welcome Home Loan which requires no deposit up to $200,000, saying it was perfect for people like her, on their own with only one income.

"I'm impressed. I couldn't do it any other way - especially when you are on your own.

"It's for people looking to get on to the property ladder," she said.

Housing New Zealand's financial products national manager Mike Adamson said the Reserve Bank had exempted Welcome Home Loans from the loan-to-value ratio restrictions.

Mr Adamson said the Welcome Home Loan helped people with modest incomes and who were outside standard lending criteria to get a home loan with little or no deposit.

"Housing New Zealand is not the lender but provides lenders mortgage insurance to participating banks, building societies and other lending institutions," Mr Adamson said.

Once people were in their new homes, there would be regular contact from the lender to provide advice and support.

WELCOME HOME LOANS

Scheme began in 2003 National total: 10,052 loans since 2003 totalling $1.87b Taranaki total: 787 loans totalling $142m Average loan value per house: $180,000 Average LVR (loan-to-value ratio): 98.6% Average household income: $56,500. New Plymouth – 251 loans for $54m Hawera – 183 loans for $32m Stratford – 90 loans for $14m Inglewood – 47 loans for $9.3m Eltham – 36 loans for $4.7m SOURCE: Housing NZ

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