- New Zealand’s ruling National Party has pledged to ease low-deposit mortgage rules for first-home buyers if it wins the November 2026 general election.
- The proposal would raise the cap on loans with less than a 20% deposit that banks can issue to first-home buyers, from 15% to 20% of new lending volume.
- National also plans to extend the eligibility window for the First Home Grant, allowing buyers to use the subsidy on existing homes rather than only new builds.
- Opposition Labour has criticized the plan as inflationary for house prices, while economists warn it could add pressure to an already stretched housing market.
- The policy is part of National’s broader pre-election platform, with housing affordability a key battleground ahead of the vote.
National’s Housing Pitch: Looser Deposit Rules for First-Time Buyers
New Zealand’s governing National Party has unveiled a fresh housing policy aimed at first-home buyers, promising to relax restrictions on low-deposit mortgages if it retains power in the November 2026 election. The pledge, announced by party leaders on the campaign trail, targets one of the most persistent voter concerns in the country: the difficulty of saving a 20% deposit amid elevated property prices and high interest rates. Under the proposal, the Reserve Bank of New Zealand’s (RBNZ) loan-to-value ratio (LVR) restrictions would be adjusted specifically for first-home buyers, allowing banks to allocate a larger share of new mortgages to borrowers with smaller deposits. Currently, the RBNZ requires banks to cap lending to owner-occupiers with deposits below 20% at 15% of new loan volumes. National’s plan would raise that cap to 20% for first-home buyers, while leaving the broader restriction for investors and other owner-occupiers unchanged. The party argues that the change would help younger New Zealanders enter the market sooner, without significantly increasing systemic risk, because first-home buyers typically have lower default rates than investors. “We want to make the dream of home ownership achievable for a new generation,” a senior National spokesperson said, though the party has not yet released full costings or a timeline for implementation beyond the election.
What Else Is on the Table?
Beyond the LVR tweak, National has promised to broaden the First Home Grant, a government subsidy currently available only for newly built homes. The party says it would extend the grant to purchases of existing properties, albeit at a lower amount, to give buyers more choice in a market where new builds are often more expensive and located outside major urban centers. The grant, which can be up to NZ$10,000 for an individual or NZ$20,000 for a couple, is income- and price-capped, and National has not specified whether those caps would change. The policy package also includes a commitment to speed up land supply for residential development, particularly in Auckland and other high-demand regions. National has pledged to streamline consenting processes and release more crown-owned land for housing, though critics note that similar promises in previous election cycles have yielded mixed results. The party has not proposed changes to the bright-line test for property investors or to interest deductibility rules, which were tightened under the previous Labour-led government and partially restored by National after it took office in late 2023.
Market and Political Reactions
The announcement has drawn a sharp response from opposition parties and economists. Labour’s housing spokesperson called the plan a “reckless giveaway to banks and speculators,” arguing that looser deposit rules would fuel demand without addressing supply constraints, thereby pushing prices higher. The Green Party echoed that view, saying the policy would primarily benefit wealthier first-home buyers who can already afford a 10% deposit, rather than low-income renters. Economists are divided: some see the LVR change as modest and unlikely to move the needle significantly, while others warn that it could add momentum to a housing market that has shown signs of stabilization after a prolonged downturn. The RBNZ, which sets LVR rules independently but in consultation with the government, has not commented on the proposal. Any change would require the central bank to amend its LVR framework, a process that typically involves a public consultation and a formal review. National has indicated it would direct the RBNZ to consider the adjustment if it wins the election, but the central bank retains operational independence and could push back if it deems the risk excessive. For now, the policy remains a campaign promise, with the election scheduled for November 2026 and polling showing a tight race between National and Labour. Housing affordability is likely to dominate the campaign, with median house prices still above NZ$800,000 nationwide and rental costs rising faster than wages. National’s proposal is designed to appeal to younger voters, a demographic that has increasingly drifted toward Labour and the Greens in recent years. However, the party must balance that appeal against concerns about financial stability and the risk of reigniting speculative buying. As the election approaches, more details are expected, including how the policy would interact with existing schemes like Kainga Ora’s First Home Loan and the government’s broader fiscal plans. For now, first-home buyers are left weighing whether the promise of a smaller deposit requirement will become reality—and whether it would actually make a difference in a market where prices remain stubbornly high.
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