There is a sweet spot now for first-home buyers outside Auckland before the market heats up.

Proposed changes to the Reserve Bank's restrictions on high loan-to-value residential mortgage lending could create opportunities outside Auckland for first-home buyers.

The Reserve Bank has published a consultation paper which proposes a tighter regime for Auckland and a more relaxed approach for other areas of the country.

At present banks are subject to a "speed limit" on lending whereby only 10 per cent of new lending can have a loan-to-value ratio (LVR) of more than 80 per cent.

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The proposal is to increase the limit on high-LVR loans outside Auckland from 10 per cent to 15 per cent. The estimated effect of this is a 4 per cent increase in house sales and at least a 1 per cent increase in property prices outside Auckland. Other proposed changes would see tighter rules in Auckland for borrowing by property investors.

KiwiSaver balances are increasing and many potential first-home buyers are finding that their combined KiwiSaver funds available as a deposit for a first home, plus first-home subsidies, are sufficient to meet bank deposit criteria. More home buyers will be eligible if the proposed "speed limit" changes go ahead.

As well as the available deposit, banks consider income and credit rating. A high level of short-term debt on credit and store cards and a poor credit rating can push people outside bank lending criteria.

There is a sweet spot now for first-home buyers outside Auckland to get themselves into a financial position to meet bank criteria and take advantage of low interest rates and possible changes in the "speed limits" to purchase before the market heats up.

The Reserve Bank will make its decision in August, with new rules effective on October 1.

* Liz Koh is an authorised financial adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free, call 0800 273 847. For free e-books see moneymax.co.nz and moneymaxcoach.com