First-time buyers in the region are hoping the Budget will make homes more affordable.

The Budget is due to be unveiled by Bill English at 2pm today and tipped by John Key to include measures targeting housing affordability.

However, Mr English has cautioned against expectations that first-home buyers would get any windfall.

Solo mum Lana Smith, 29, who had been in the market for her first home for about a month, was hopeful the Budget would ease her struggle to get on the property ladder.


Ms Smith and daughter Raven, 5, lived with her mother Lillian in Napier South.

Ms Smith, who worked in a stationery store, hoped to buy a home through a mortgage broker with the Welcome Home Loan, but was having difficulty coming up with the required deposit.

Hawke's Bay Home Loans director Graeme Putt said first-home buyers were eligible for the Welcome Home Loan, supported by Housing NZ, if they didn't earn above $120,000, weren't buying a house priced above $300,000 and had a minimum 10 per cent deposit.

The introduction of tougher loan-to-value ratios (LVRs) in November last year was accompanied by changes to the eligibility criteria for the Welcome Home Loan, though the changes weren't widely reported in the media, Mr Putt said.

Up until November last year, eligible buyers could buy a $200,000 house with no deposit and the deposit for houses over $200,000 was 15 per cent of the amount above that price.

Now the minimum deposit for the Welcome Home Loan was 10 per cent, Mr Putt said.

Dowie Mortgages owner Stuart Dowie said the changes made to the Welcome Home Loan's eligibility criteria had made it "immeasurably more difficult" for first-home buyers.

"We've tried to use a bit of input from family members [parents], but irrespective of the creativity, a lot of people have said, 'this is too hard - we're going to keep our money and look at buying a home further down the track'."

Tougher lending criteria could create a false delay as people saved their money and entered the market later, Mr Dowie said.

"Long-term, I see a steady stream of first-home buyers coming to the market."

Asked if the Budget may ease conditions for first-home buyers, Mr Dowie said he didn't believe so.

"My opinion is that when the Reserve Bank finally has a look at the LVR restrictions they may look at Welcome Home loans as well."

Ms Smith said some of her friends had qualified for the Welcome Home Loan before the 10 per cent deposit became a requirement last year. Now she was ready to buy her first home and uncertain whether it would be possible, even with her mother helping out as much as she could. "It's not easy to come up with a 10 per cent deposit."

A 10 per cent deposit could mean as much as $20,000 upfront.

"My main concern is we won't have enough for the deposit - we'll fall short and they won't give me the loan."

Lana, Raven, her four cats and a dog named Rufus, were itching to give grandma Lillian some respite.

Ms Smith said she wanted the Budget's measures to lead to more lenient lending restrictions, such as a minimum 5 per cent deposit for the Welcome Home Loan. Chairman of the Property Institute of New Zealand's Hawke's Bay branch Trevor Kitchin said he hoped the Budget wouldn't prompt a rise in interest rates because Hawke's Bay's market was "just hanging in there".

A rise in interest rates could trigger a respective rise in LVRs, Mr Kitchin said.

Releasing the Reserve Bank's six-monthly report on risks to financial stability yesterday morning, deputy governor Grant Spencer said "we consider the earliest date for beginning to remove the LVR restrictions is likely to be late this year".