Apartments are a growing part of the Auckland market in particular, as high prices force first-home buyers to alter their expectations.
Most banks expect 20 per cent equity from owner-occupiers, and 30 per cent from investors.
Westpac has already lowered its requirement to 15 per cent.
Kiwibank’s new policy, which some mobile mortgage managers have already revealed to real estate agents, allows lending up to 85 per cent on owner-occupied apartments in the Auckland CBD with a minimum apartment size of 40 sq m.
It will lend up to 90 per cent on owner-occupied apartments in areas bordering the CBD and in suburban areas.
Apartments bought off the plans are exempt from the LVR rules that restrict the amount of lending banks can do to borrowers with deposits of less than 20 per cent.
Kiwibank will allow LVRs up to 70 per cent to apartment investors.
Kiwibank spokesman Bruce Thompson said: “The key driver behind reviewing our apartment lending policy has been to recognise the residential property market changes within the Auckland region and the opportunities this presents to support our Auckland growth strategy and market share in this region. The policy also covers regions outside of Auckland. We are aiming to deploy a new strategy later this month.”
Mortgage Supply Co chief executive Jenny Campbell welcomed the move.
She said Kiwibank had low exposure to apartment lending so the move would likely diversify its book.
“It’s a real help for first-home buyers. This is definitely the way things are going to go. People have to figure out that if they are going to buy a first house in Auckland it’s most likely to be an apartment or terraced house.”
