Home loan affordability worsened again across most of New Zealand in October, as house prices continued to rise, despite the Reserve Bank imposing lending restrictions from October 1.
The Roost Home Loan Affordability report, released yesterday, showed a significant slowing of low-deposit lending and first-home buyer activity through October but it had yet to flow through into a slowdown in house price inflation.
Median house prices rose in 19 out of 24 regions and hit record highs in Auckland, Hamilton and Canterbury.
The report showed affordability worsened in 12 out of 24 regions as small income increases in some areas only partially offset the effects of higher house prices.
It was toughest for first-home buyers in Auckland where it took 101.7% of a single median wage, after tax, income to afford a first quartile-priced house on the North Shore in October.
Roost Brokers spokeswoman Colleen Dennehy said mortgage brokers reported banks being cautious about lending to those with deposits of less than 20% of the value of the property being bought, given many banks wanted to be ''absolutely sure'' they were within the Reserve Bank rules which limited high loan-to-value (LVR) loans to 10% of all mortgages.
''The Reserve Bank's new policy has shaken up the banks' lending and marketing strategies. Banks are being choosier about who gets a loan and what their interest rate will be, which means borrowers need all the help and advice they can get from a broker.''
Average fixed mortgage rates, which more than half of new borrowers now used, fell slightly in October for those with more than 20% equity and after-tax wages rose by $2 a week, to $816 a week. Interest rates rose for those borrowing more than 80% of the value of the home.
Ms Dennehy said housing affordability had become a major economic and political issue during the past 12 months.
The Reserve Bank and the Government agreed on a tool kit of macro-prudential controls in May that would see the central bank impose limits on high LVR mortgages. Central and local governments were also moving to address housing supply shortages.
