New Zealand's banks have already started tightening up their lending criteria for customers seeking low-deposit mortgages, despite new regulations not kicking in until next month.
The Reserve Bank's new rules, announced last month amid fears of a housing market meltdown, restrict banks in how much of their money they can lend to home buyers with less than 20 per cent deposit.
From October 1, the low-deposit loans will only be allowed to account for 10 per cent of a bank's new lending - a restriction estimated to halve a customer's chances of securing the debt.
Though some hopeful home buyers say banks have already started reining in their lending, and appear to be moving the goalposts on pre-approved loans.
Squirrel Mortgage Brokers' chief executive John Bolton said his company was "definitely" seeing banks tightening up on lending.
"Banks started tightening up in the last three or four weeks since the Reserve Bank's change," he said.
The early clampdown was affecting his clients, some of whom had pre-approval for loans with deposits of just 10 per cent.
He had been fielding concerns from clients who were worried it would lapse before they found a suitable property.
"People are quite concerned about it. I've had client meetings and have been taking lots of phone calls, people are concerned they are going to have to settle [for a property] before their pre-approval runs out, in case they can't get it extended."
Mr Bolton expected to see "panic buying" as people rushed to find a property within their loan criteria and said under the new rules customers could expect to be forking out extra for fees, too. "It's going to be a lot more expensive now to buy your first home or borrow over 80 per cent."
Of all the major banks surveyed by the Herald, only Kiwibank and Westpac responded. Kiwibank stuck to its previous claims that first home buyers would receive preference over investment property buyers.
Westpac said: "We assess each loan on its own merits. We have a requirement to meet the Reserve Bank regulations and we continue to remain open for business."
New Zealand Bankers Association chief executive Kirk Hope said it would be no surprise if banks were making changes before the month's end as they got their heads around the new changes.
"October 1 is only two weeks away," he said. "The Reserve Bank have shifted the goalposts ... banks have to take that incredibly seriously because it is part of their licences to operate."
Mr Hope said customers should speak to their banks about any concerns, and read the terms and conditions of any pre-approved low deposit loans carefully.
Two hopeful home buyers caught up in early changes:
Case A: Andrea, Auckland
The 33-year-old, who did not want her last name used, had been looking to buy a house all year. Four major banks pre-approved a mortgage based on a 10 per cent deposit of $50,000. Six weeks ago she found a house she liked and went back to them, only to find the rules had changed. "Two said they wouldn't, and the other two said yes but put quite crazy conditions around it. Because I wanted to increase the housing price they said they would only do it with a 20 per cent deposit. I just assumed [the new rules] were already in effect." One bank told her by email they were. Andrea was now looking at using her mother as a guarantor and several banks had said to expect higher interest and extra fees.
Case B: Margaret*, Auckland.
In August, Margaret changed banks so she could buy another house. A mortgage broker at the new bank with nearly 20 years' experience in the industry told her it had already put new lending restrictions in place. "[He] told me [the bank] had been requesting the 20 per cent deposit for weeks. He also said there were a lot of frantic buyers out there who had the standard six-month mortgage approval with a 10 per cent deposit, and need to buy before the approval runs out and they need 20 per cent." She was now using her existing home's value as equity for the purchase.
*Not her real name