Banks are not using their full capacity to lend to home-buyers who don't have a 20 per cent deposit, Reserve Bank figures show.

Loan-to-value ratio rules mean banks are not allowed to lend more than 10 per cent of total mortgage lending to owner occupiers with a deposit of less than 20 per cent.

But in five out of the nine months to June it dipped to less than 9 per cent across the banking sector.

And once exemptions - lending which is outside the criteria - are taken out, it is even lower with five out of nine months below 6 per cent.

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Bruce Patten, a mortgage broker with Loan Market in Auckland, said it appeared that banks were not using their full capacity.

"I believe they are running at 8 per cent out of 10 per cent."

Patten said banks were paranoid about breaching the caps which were resulting in him having to turn down one in five first home buyers at the moment.

"Every day of the week we are saying hold on and save more, get into KiwiSaver. It is hard for them unfortunately."

Patten said the restrictions meant he was having to shop around the banks a lot more to see who had a capacity to lend.

A BNZ spokeswoman said it couldn't run right up against the caps because of pre-approvals which could be called in at any time.

"The reason that we are often under that 10 per cent is because at any one time we can have pre-approvals that can be drawn down."

She said the bank had to be deliberately conservative so it did not go over its cap because of the serious consequences of doing so.

Banks that breach the cap face losing their banking license.

An ANZ spokesman said the amount of lending it did for customers with less than 20 per equity varied depending on market conditions.

"Currently, both ANZ and our customers are exercising prudence.

"While our door is always open for over-80 per cent LVR home loans, we're very focused on ensuring customers have a loan that fits their circumstances and that they are in a position to make repayments comfortably.

"We're also seeing more customers choosing to wait and grow their equity before buying a home," he said.

A Westpac spokeswoman said it differed to the other major banks in that it offered Welcome Home Loans which are exempt from the LVR cap.

"These are low-deposit home loans for people who are buying their first home, have a 10 per cent deposit, will live in the house they're buying and has an annual household income before tax of $85,000 or less for one borrower, or below $130,000 for two or more borrowers.

"This allows them to buy properties in Auckland up to $650,000 in value, or up to $550,000 in large cities and up to $450,000 in other parts of the country."

Outside of that the bank said the current regulations allowed it some flexibility for other first home buyers to get into the market.

"But the most important thing for our customers and for Westpac is that the loan is serviceable and that they have not overextended themselves.

"The amount of money lent to borrowers with an LVR above 80 per cent varies from month to month."

An ASB spokeswoman said: "LVR limits are set by the RBNZ and are a condition of the bank's registration. In order to avoid being in breach of those conditions ASB, like other banks, maintains a buffer for lending in the over 80 per cent LVR space."

Patten said he would like to see some softening of the LVRs to help first home buyers.

"I would love to see them relaxed for the first home buyer market."

"Investors can afford to wait. Those trying to get in need a break."

The Real Estate Institute has called for first home buyers who buy a house valued at up to $600k to be exempt.

But Christian Hawkesby, head of fixed interest at fund manager Harbour Asset Management, said LVRs were a macro prudential tool which meant they were not something you tinker with regularly.

Hawkesby said any changes would not be fast.

"All of those complaining about the LVR restrictions limiting first home buyers are missing the point. LVRs are supposed to protect borrowers from themselves."