29 Nov 2013

First home buyers losing out, says real estate firm

10:26 am on 29 November 2013

A national real estate company says first time buyers are being increasingly shut out of the market as banks comply with the Reserve Bank's new home loan lending rules.

First National Real Estate says speculators are flooding the market and taking advantage of a gap left by the departure of the first home buyers.

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Photo: RNZ

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.

First National Real Estate chief executive Colleen Milne said banks are running scared, and lending to investors with more equity is preferred.

She said investors tend to haggle more than first time buyers, and people will be less willing to sell if the market price lowers, so supply will be reduced.