Banks relax home lending

First-time buyers will be able to get into their homes faster as banks ease their lending criteria.

For the first time since banks tightened mortgage lending last year, Westpac has started advertising for home buyers with a deposit of less than 20 per cent.

Mortgage brokers have reported other banks lending at more than 80 per cent of the value of the property.

The trend comes as Real Estate Institute figures released yesterday show a slight rise during June in national median house prices, from $337,000 to $340,000.

"We are cautiously optimistic that we have seen the worst of it (price falls)," institute president Mike Elford said.

He said the easing of deposit criteria was another positive step to spur activity although there would not be a return to the days of probably getting a loan "as long as you could walk and talk", because banks were understandably looking for better quality lending.

Mike Pero Mortgages chief executive Shaun Riley said Westpac had been selectively lending up to 90 per cent of a property's value.

He said Westpac was probably thinking property prices had either bottomed out or would not fall much further and it was now more comfortable about doing a higher volume of lending above 80 per cent of property value.

The move would help stabilise the housing market by getting people looking for properties.

Riley said banks were more willing to work with brokers to negotiate deals. Instead of declining an application straight away, banks were asking for extra security or a guarantor.

Westpac spokesman Craig Dowling said a combination of lower rates, funding being more accessible and vendors being more realistic on prices meant there were more opportunities for buyers.

He would not say how low Westpac would be prepared to go, but a 10 per cent deposit was within lending bounds. The bank would probably not provide 100 per cent mortgages.

Christchurch mortgage broker David Tillman said it was rare to find first-home buyers with a 20 per cent deposit, and most had to borrow from their family to reach the threshold.

He had noticed banks beginning to ease their lending policies in the past two weeks.

Tillman said many banks had tightened their lending too much and were now refining their policies.

ANZ National spokeswoman Virginia Stracey-Clitherow said it generally did not offer new lending in excess of 80 per cent, and it had no plans to change the policy.

ASB retail banking chief executive Ian Park said it still had a policy of obtaining a 20 per cent deposit, and he believed it was inappropriate to review that in the current market.

Tillman said he had found that ANZ National would still lend to people with high incomes. "They're looking for the cream of the crop. They like professionals. If we get a doctor or something like that earning $100,000 a year, they will all want to have a look at it, with no promises," he said.

BNZ said it was continuing to provide home loans to customers with less than a 20 per cent deposit, but every application was treated on its merits.

Kiwibank acting chief executive Paul Brock said it had always lent to people with less than 20 per cent deposit, but some of its special interest rates were not available to those borrowers.