ASB joins Kiwibank with special deal for KiwiBuild home buyers, saying they'll 'potentially' only need a 5% deposit & get $2,500 towards costs

ASB joins Kiwibank with special deal for KiwiBuild home buyers, saying they'll 'potentially' only need a 5% deposit & get $2,500 towards costs

ASB says it'll provide loans to KiwiBuild home buyers who have just a 5% deposit and provide $2,500 cash contributions.

Claire McKinnon, the bank's acting executive general manager of retail banking, says ASB will give a $2,500 cash contribution to customers who take out an ASB home loan to purchase a KiwiBuild property, upon settlement of their loan.

“The $2,500 cash contribution is to help take away a layer of expense. For example, it can be used towards the costs of purchasing their new KiwiBuild home, such as a property valuation or legal fees,” McKinnon says. 

"Plus, ASB will provide pre-approvals of up to 95% of the value of a KiwiBuild home for eligible customers, meaning participants may potentially only need a 5% deposit on their property," McKinnon says.

The Government has committed $2 billion for KiwiBuild, through which it aims to deliver 100,000 "modest starter" homes for first home buyers over the next decade. About 50,000 of these homes will be built in Auckland, and sold at prices up to $650,000. At the $650,000 top end of the KiwiBuild price range, a buyer getting a 95% mortgage would require a $32,000 deposit. There's more detail on KiwiBuild here.

ASB's announcement comes after Kiwibank last month said it will pre-approve mortgages for up to 90% of the price of KiwiBuild homes, and will also contribute $2000 towards buyers' moving or legal expenses.

McKinnon says ASB has also established a direct line to a specialist lending team for customers wanting to talk more about KiwiBuild. ASB’s lending criteria, terms and fees apply for the KiwiBuild loans. 

Also see: The fact borrowing on the 100,000 KiwiBuild houses will mostly fall outside the LVR restrictions may force a rethink on macro-prudential policies.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


95% mortgage for an affordable KiwiBuild house.

So, doing the sums...

House price: $650,000
Deposit: $32,000
Interest rate: 4.99%
Term: 25 years
Weekly: $831

Plus rates and insurances.

Wonder how affordable that's going to be for folk.

For a couple on decent incomes, I'd say it is doable quite comfortably.

I think the reality is that combined deposit is likely to be higher than the 5% required ($32,000), particularly if they are drawing on their kiwisaver balances. Term would be 30 years and interest rate more likely be 4.25%. Would be paying less than $350/week each, which can be significantly offset by getting in a couple of housemates in to the other two bedrooms at $170/wk each (assuming this is allowed under kiwibuild purchase conditions). .

Totally doable but you don't need a 30 year Mortgage, you save next to nothing over a 25 year or even a 20. You both need decent jobs, don't have any kids and its a walk in the park.

That is a problem though, isn't it?

We make it so difficult for productive people to afford a life with children, to the point we'll end up resorting to importing more population at the low end and subsidising their viability from this couple's salaries.

You are not thinking 'doable' enough.

Two bunks/four beds to a room , a pull out bed in the lounge, and hot bunking.

Not only affordable, but some serious commercial coin as well.

You forgot to mention get the local minivan driver in to do the morning and afternoon runs to the Takanini train station where your (probably Asian) student will get some quality NZ cultural exposure in their first week (ie. be relieved of their shiny i-phones and apple watches on day 1...)

You're dreaming if you think the interest rate on a 90%+ loan will be 4.25%.

Yep current low equity margin for less than 10% equity is 1.30% on standard rates, so that makes one year rate 5.99%

Where did your 4.99% interest rate come from?

Its affordable for us, but we are on good incomes pretty close to the top of the kiwibuild eligibility criteria.. but not attractive, at least not with the current kiwibuild dogboxes in Papakura. Specially when you spent last night chatting online to someone who just picked up a good property in a good Auckland location for 15% under CV.

Just need to wait and see if that was just good timing on his part, or thats where the market is going.

650K for a brand new, 3 bedroom, stand alone house in Auckland isn't "attractive"? It's charity is what it is.

Upswing phase of the cycle is due 2021/22, so best not dilly dally.

Its called government subsidized housing. The deal breaker is whether or not they actually build enough of them to make a difference.

Indeed, that's the crux of it. If they can ramp up supply initiatives enough and if changes to other factors are put in place (e.g. ringfencing, or immigration volumes) it could be a powerful cocktail in two ways:

1. Direct effect on house prices
2. The 2020 election, where National will be forced to run on "We're going to dismantle everything to push house prices out of reach of young Kiwis, because investors want endless capital gains".

Yes, agreed.

My expectation is that kiwibuild won't actually add much to the total number of houses built (kiwibuild will just be underwriting houses that would've been built anyway), but those that are built will be smaller and cheaper.

I don't think the prices are subsidised.. look at other homes in the development that aren't kiwibuild homes like this one ( then compared the size and features to the kiwibuild ones. The kiwibuild ones are cheaper, but you get a lot less too.
I'd call the kiwibuild homes fairly priced.

For them to offer this ONLY on Kiwibuild houses heavy suggests there is a subsidy or risk underwrite being covered somewhere in this.

What makes a Kiwibuild house less risky to fund that all the others?

And of course to qualify for a 5% deposit, you will have to show that you are so well qualified that in effect you don't need it.

Chances are, if you only have a 5% deposit, then you will be down the list of those that will qualify first by being able to pay more.

This is typical bait and switch marketing.

I'm guessing if you bother to negotiate they'll do the same deal on any other new build home under the same circumstances. Its just a press release to get more attention and to try to pick up more loans in a quiet market.

Well, yes, the subsidy is the house itself.

This just shows that the banks perceive the Kiwibuild properties to be under priced / under true market value.
Hence the willingness to loan 95% because the risk is so low.
They sure as hell aren't going to be offering it on other new builds such as Pokeno or Kumeu.

If the banks think a postage stamp sized section with a shoebox cheaply built single level 120m2 4 bedroom house in papakura is underpriced at $650k we really are in more trouble than I thought.

PS, banks are obviously doing 95% finance for other new builds, just look at any developers ads on trademe. like this one in pokeno :P

They offer similar deals to other owner occupiers it is just they get more marketing as caring about NZ families by linking it with kiwibuild. Compare that alongside ANZ's having a home is an aspirational dream campaign and they seem to be well positioned for more NZders to be swayed by their marketing bollocks to sign up to 28 year mortgages of over half a million.

No, Papakura isn't attractive, nor do i really call it in Auckland.

And have you looked at the houses? They are cheaply built dogboxes.

You strike me as the type that likes to virtue signal, so I’m surprised you’d comment that Papakura isn’t good enough for you. The houses looked well built and designed in all respects to me, although modest.

By “charit” I meant the government taking all the risk to build a house that the market wouldn’t, without taking any profit. There is a reason you need to enter a ballot (i’d call it a lottery) to buy one of them. Let’s check the Q.V. in 5-10 years time. The buyers will be very happy.

You seriously think house prices are going to come down so much that you’ll be able to wait and get a better deal than that in the future? Not going to happen. The opposite is true.

You are assuming facts not in evidence. Papakura is too far in the wrong direction, neither myself of my partner would want to drive up that southern motorway every day to get to work. Better to put the extra gas money into a mortgage on a better located property.

And yes, in real terms (maybe not nominal prices) houses will be a better deal in 5-10 years.

Southern motorway? There is a perfectly good train station in Papakura. $6.20 to the city. I think it has or is about to be upgraded actually. Hope you’re not too good for public transport as well.

For a better located property at that price you are in appartment or terraced unit territory.

I think you should knock yourself out and load up with property in Papakura since you seem to love the place so much. Enjoy

I’d buy one of these kiwibuilds if they’d let me. Enjoy waiting for the crash that isnt coming.

But would you live there? And there probably wont be a crash.. just a lack of capital gains for the next few years.

If it was my first home, heck yes I’d live there. 5 years goes quick, then I’d most likely use the equity to move somewhere else and rent out the Papakura house. I lived in Conifer Grove as a child for a while - nice enough.

Top notch house -

You should look at the non-kiwibuild new SHA & suburb developments. Many have far worse quality. To say this is where the market is at now and the basic 90sqm 1950s homes with no land outside of the minimum fencing distance are now "aspirational" (not even a luxury), would not be far off. The old attitude around basic housing is just that old. Nowadays even having a dog box would be a mark of success. Having the land to put your dog box on would be in the upper tier.

What happened to LVR ?? Obviously under valued for such a low deposit big lolly scramble !!

No LVR limits on new builds for owner occupiers. And no, they aren't undervalued, they are tiny and cheap in a cheap area.

Just used the standard calculator on

okay, was just wondering if ASB had actually said what they would charge.

Good point, I should probably have used their calculator. Recalled there was some commentary out there about the faults of banks' various calculators so went to the other sites.

No, the issue is the low equity margin they will add on for being >80% lvr. Some common-taters on other sites are suggesting its likely to be more like a 5.5% or higher rate once thats taken into account.

Ah, got it.

So, over 25 years it's $874 paid weekly, plus insurance, rates and maintenance. On a 20 year term it's $978 per week.

Stress tested at 7% over 25 years it's $1,006 per week.

I guess...this would encourage a low birth rate.

Well, presumably any low equity premium only applies for the time it's low equity. If it's still low equity over 25 years, there's a bigger problem!

True, but for the first 5ish years that what the new owner would be paying.

I guess that depends on whether they're undervalued or overvalued v market and how quick someone pays it down.. but it would be at least for 2+ years I imagine!

Pity the site calculation is the easy part any calculator could provide. The actually useful part is how the bank assesses superstitions on assets, employment & job type, age, medical conditions (inclusive of family), and house location. You can be one of the best software engineers in NZ but if you are self employed, older, have plenty of cash and land assets, and plan to continue work from home in a new city the banks will still subject you to the ever increasing mortgage discrimination (likewise for people who would face the 90 day wait period which is longer than many contracts and student loans). Had that happen to a friend and they had to write a shameful begging letter to the mortgage dept stating their work experience, concrete income they could pull and all the non work from home jobs they could also access and they were still denied their first mortgage. Note to anyone else, go for a standard long term office job when younger and then once you get the mortgage go in for the edge case roles. Requests from kiwisaver are even worse for those using it for their home financing.

Yes the KiwiBore houses at Papakura look cheap and nasty really.
Has anyone actually seen any photos of the living room?
Twyford said they were spacious open plan living and yet no photos.
The master bedroom photo seems to have a double bed that overlaps the window.
These may suit couples but forget about it for kids and no outdoor living!
Good luck if you buy one as they are going to be an absolute lemon!
Watch the moans and groans p!

KiwiBore house = a warm and healthy compliant home vs a TM2 rental that's likely cold, damp and mouldy. These new and proposed WOF standards for healthier homes rile you don't they?

Oh harden up. As we all know for a fact, Cantabs don't want heat. Their hatred for jaffas is more than enough heating

Cheers for the laugh. Was going to mention the communal couch burning in Dunedin but yours was better. I guess Otago is just warmer in heart than Cantab. (Or it could be the vino and whiskey).

RP, seriously all our properties would be far better than what I saw on TV at McLennan!
Not one is cold or damp and are all very well maintained by professional landlords.
I do feel sorry for people if they have to lay 650k for the boxes that I saw on pathetic little sections.

you have previously said that your are not fully insulated, and i very much doubt that many of them have double glazing.. so no, your houses are cold and damp compared to the houses at Mclennan.. and also located far further south, so likely to be iceboxes in winter without a ton of heating.

You are telling untruths Pragmatist.
All our properties are fully insulated!
The only one that isn’t we haven’t settled on and then that will be made fully compliant.
There is a helluva lot more capital gain in our portfolio than thousands of shoeboxes altogether in Auckland.
They are shocking for 600k but if that is what first home buyers think are value then they are deluded!

No, they are not fully insulated. you admitted it yourself, you have not relined and insulated the walls. Therefore they are not fully insulated, only partially. your comment at 19:12