Prime Minister Christopher Luxon says there would be low risk to the Government from expanding the first-home loan scheme to those earning up to $300k.
Speaking on Newstalk ZB’s Mike Hosking Breakfast, Luxon said National’s latest election pledge wouldn’t put the Government “on the hook” for a substantial amount of money, even if buyers using the scheme were forced to sell with negative equity if prices fell further.
He said the model was a type of mortgage-lender insurance, lowering the risk for banks of lending to low-deposit buyers.
About 7500 first-home buyers had applied for the scheme in the past nine months. However, around half of first-home buyers weren’t eligible as their incomes were too high.
“First-home buyers are up 29%, mortgage serviceability because of lower interest rates is up 61% under us. So, the real problem that people are finding is not servicing the mortgage – it’s actually getting the deposit together.”
National’s latest campaign promise would see buyers earning up to $300,000 eligible for the 5% deposit scheme.
Since 2003, the In Reach loan scheme – renamed the First Home Loan scheme – has helped more than 33,000 households to buy a home.
The current income cap is $95,000 for an individual with no dependents, or $150,000 for multiple buyers or a single person with dependents.
Announcing the policy on Sunday, Luxon and his housing spokesman Chris Bishop said the cap was too restrictive and hadn’t been updated since 2022, with around half of first-home buyers now earning more than $146,000.
The proposed $300,000 cap would not distinguish between single or multiple buyers.
National wanted home-ownership rates back to their peak in the 1990s, when almost three-quarters of households owned their own home.
Only two-thirds of households currently own their home, although first-home buyers have been buying a record share of properties as house prices have fallen.
The party estimated its policy would cost the Crown $4-$6 million extra per year.
Meanwhile, the Green Party has announced its plan to break up the supermarket duopoly by nationalising 120 supermarkets to create a new Government-owned supermarket chain known as KiwiMart.
KiwiMart would have a mandate to prioritise affordability. Greens co-leader Chloe Swarbrick said currently two companies controlled what almost everyone in New Zealand ate, while taking $1m daily in excess profits.
“That is money that should be in people’s pockets,” Swarbrick said.
The plan has been costed at $2.8 billion, which includes buying 120 Woolworths and Foodstuffs stores and two distribution centres, and capitalising KiwiMart to make it a commercially viable competitor.
