The Reserve Bank announced yesterday that lending criteria will ease and industry experts are saying it's good news for the Rotorua market.

The central bank said that from the start of next year it would increase the cap on banks from 10 per cent to 15 per cent for new mortgage lending to owner-occupiers.

Read more: First home buyers flocking to Rotorua for its affordability
Slight drop in Rotorua average house values

At present no more than 10 per cent of loans can go to owner-occupiers with a deposit of less than 20 per cent.

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Professionals Rotorua agent Steve Lovegrove said the real estate industry and the marketplace had been calling for quite some time for an easing of restrictions for first-home buyers.

"Nothing makes us more happy just from a principle point of view if the Government can make it easier for first-home buyers to get into their first home – that's fantastic."


Lovegrove said he knew of a "property chain" in Rotorua that was being held up by a first-home buyer who had not been able to get a large enough loan from the bank.

"So there's a first-homer property and then when that sells, those people are going to buy a family home, and then when that family home sells, the people who own that family home are going to buy a lifestyle property.

"So you see the lifestyle property can't sell until the first-home buyer can get their money for the first-homer property.

"That 5 per cent would make a difference in that instance, it would make a difference for three families all the way through the chain."

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Lovegrove believed there would be many similar situations.

Mortgage Centre Rotorua mortgage broker Graham Lee said the announcement wasn't staggering and he expected the market would remain fairly moderate.

"In terms of Rotorua, I would have to say that we will have to wait and see what happens.

"Some first-home buyers could choose to hold off until the rules ease, a first-home buyer might take a bit of a 'wait and see' attitude to it if they are going to be 90 per cent borrowers or over 80 per cent borrowers."

Lee said the announcement did not change the fact there was still not enough suitable housing in Rotorua.

"We've got a lot of clients in our books who are pre-approved and they just simply cannot find a suitable house."

Lovegrove hoped it would continue to become easier for first-home buyers to enter the market.

"Either house prices have to come down so people can afford to buy or the bank lending criteria has to ease so that these first-homers can get into the market.

"A little bit at the time. If this is not enough perhaps they could look at increasing it later, that would be good. I think if it happens incrementally it is better for the marketplace.

"Certainly if we could have a little bit more relief in the market then we'd see a bit more movement," Lovegrove said.