Some prospective buyers in the already tough Tauranga property market are finding new obstacles to buying a house as bank wait times are "blowing out" and lending criteria appears more strict post-Covid-19.
However, banks say their lending criteria has not changed and every loan application is assessed on a case-by-case basis.
One mortgage broker says it's the "ridiculously short" finance dates in sale and purchase agreements at fault, meaning buyers are running out of time to secure their finance.
New residential mortgage lending data collected by the Reserve Bank of New Zealand shows the amount of money lent nationwide in August 2020 had risen by more than $1 billion to $6.785b when compared with the $5.386b lent in August 2019.
Tremains Bay of Plenty and Waikato general manager Anton Jones said banks appeared to be more strict in applying their lending criteria and the time frames for dealing with applications were "blowing out a bit".
Jones said they were seeing more back up offers than they were pre-Covid and were still getting a lot of multi-offers on properties.
"It's not a huge number of house sales going to back up offers but there's certainly more than there were pre-Covid.
"There are a lot of people who think they have got their finance in the bag because they got their pre-approval a couple of months ago but when they go to put an offer on a house, they are finding their finance isn't approved.
"Banks are also looking at people's occupation and assessing the risk profile of the sector they work in. That wasn't something they were doing before but it's all about the serviceability of debt and whether the bank can be assured of the security of your job."
Simon Anderson, managing director of Realty Group Ltd, which operates Eves and Bayleys, said offers that were subject to finance had always been a challenge but buyers who were well prepared and organised were seeing success.
"Banks are potentially being more careful in their criteria but buyers who have their ducks in a row are getting into houses.
"The number of offers being made on properties has increased so the number of offers falling through has increased, too.
"There is also the pressure of other buyers putting in offers, so some buyers are going in quick without being properly prepared.
"My advice to buyers is to know what your bank requires before even starting to look at houses and be guided by the experts."
The Mortgage Centre's Graeme Leigh said 100 per cent of the applications he had submitted for his clients in the past 12 months had been approved by banks.
"I am not seeing an increase in declined applications at all. I've been a mortgage broker for 21 years and what I think is more likely is there are too many people with a high amount of high-interest short-term debt.
"I have had some clients who are missing out on houses but it's not because they haven't got the finance, it's because there is so much competition out there."
Leigh said mortgage brokers had a better chance of securing finance for a potential buyer than when a buyer went directly to the bank.
"If a buyer puts an offer on a property and then their finance gets declined by the bank, they don't have time to go to another bank to try get approved. With a broker, if one lender declines, we have the ability to duplicate the application and send it to another without the wait time.
"The problem is finance dates are very short, some sale and purchase agreements require finance in five working days which is a ridiculously short amount of time. If a buyer can't see the bank manager for a week, they've run out of time.
"These finance dates need to be extended to reflect the current climate."
Kiwibank borrowing and investments product manager Richard McLay said by July and August, the number of new Kiwibank home loans in the Bay of Plenty had recovered to pre-Covid-19 levels.
"While there is an increased focus on the customer's ability to service any new lending, we have not materially tightened any of our lending criteria since Covid hit in March.
McLay said nearly 30 per cent of Kiwibank loans for new property purchases in the Bay of Plenty this year went to first-home buyers.
A Westpac NZ spokesperson said the bank was open for new lending and continued to assess all applications on a case-by-case basis.
"We haven't changed our lending criteria as a direct result of Covid-19, but we regularly review our policies to ensure they offer the best possible support for our customers."
An ANZ spokesman said: "We're still ready to support customers into their new homes, but, as always, we have to make sure we're supporting customers to make good borrowing decisions – particularly with higher LVR lending."
He said because first-home buyers tended to have a smaller deposit and therefore typically borrowed more than 80 per cent, these borrowers, "need to show that they have good residual income after mortgage payments and expenses as a sign that they can withstand any adverse changes in their household financial situation".
"As can be the case even before Covid, the customer's circumstances may change between the assessment and issuance of the pre-approval and seeking finance for a potential purchase.
"This is why we ask customers to contact us before putting an offer in on a property as it allows us to reconfirm the circumstances surrounding the potential borrowing."