Banks are tightening up on their lending - making it more difficult for people to shop around for mortgage deals if they have a deposit of less than 20 per cent.
Mortgage brokers say the shift - a result of new Loan to Value Restrictions (LVR) - is making it even more difficult for first-home buyers to get on the property ladder.
The Reserve Bank of New Zealand recently announced that the amount of lending banks could do above an LVR of 80 per cent had changed from 20 per cent to 10 per cent on all new home loans to owner-occupiers.
New Zealand's largest bank - ANZ - confirmed it no longer accepts applications from people who were not customers with deposits of less than 20 per cent.
An ANZ spokeswoman said it was not accepting applications from other banks where the deposit was less than 20 per cent.
''All other home loan applications can be assessed under standard criteria which includes assessing affordability and suitability.''
The volume of home loans being processed was affected by Covid-19 level 3 restrictions in Auckland and therefore slightly lower than this time last year.
''We expect continued strong demand for home loans in the coming year with a strong property market and continued strong demand for housing.''
Harry van der Merwe, from Hello Mortgage and Insurance Advisers in Rotorua, said the LVR rules had stripped first-home buyers of choices.
Banks had different affordability calculators and debt-to-income ratios were also in the mix when they assessed applications.
Some banks were not giving pre-approvals and ''it has just got a lot harder'' for prospective homebuyers who only had a 10 per cent deposit, he said.
''So they need to make an offer on a property subject to finance and then we can submit it to the bank. If we can get it over the line with their own bank that is fantastic but if we can't there is no other option.''
Van der Merwe said one of his clients had tried to get a home loan and the bank directed him to an 0800 number instead of a face-to-face appointment.
''When you are trying to do home loans over the phone with someone in Auckland it becomes real messy. So my advice is to go to a mortgage broker to help you ... they have the knowledge and are local.''
Rapson Loans and Finance owner Chris Rapson felt the LVRs were ''unfair''.
Aged in his 60s, he said ''I think we've let the next generation down.
''We've saddled our young people with student loans and paying for our national superannuation. We've written ourselves a big ticket for future income.
''And we've made housing unaffordable. If I was the next generation, I'd be very upset.''
Rapson said as primary financial advisers, it was their job to advise clients to understand and assess their position and then suggest the way they should move forward.
''Often we do that and we go through that process and we get funding approval from one bank. Then the client says, 'I'd like you to go to another bank'.'
''But you've actually got the key to the golden door.''
TSB customer solutions and service general manager Sean Edwards said generally TSB prioritised loans with 10 per cent deposits for existing customers.
There was limited funding available to banks for high LVR loans, he said.
It may lend at a 20 per cent deposit to customers who were with other banks if they met lending criteria.
''We currently have a rate-beat offer for any of the major Australian banks and from time to time we also provide cash contributions to assist borrowers in the costs and efforts of moving.''
The processing of loans varied significantly depending on the nature of the loan and the availability of information from customers, so having that ready would make the process faster.
Edwards said TSB had more lenders than last year and he expected there would be good demand for home loans into 2022.
A BNZ spokesman said it made lending decisions on a case-by-case basis, depending on the specifics of the lending, the property being purchased and more.
Deposit requirements were in line with the LVR ratio policies, which generally require a 20 per cent deposit. New builds purchased off-plan or under construction only required a 10 per cent deposit, while existing properties purchased as an investment needed 40 per cent.
''The housing market is competitive, and while we're not seeing the huge volumes of purchases that occurred at the end of 2020 and the start of this year, our team is busy and working hard to help people achieve their homeownership goals.''
Kiwibank's head of lending and borrowing Chris Greig said given the limited scope it had to provide loans with less than a 20 per cent deposit, ''our focus for this group is on our main bank customers''.
"For customers with a 20 per cent deposit wanting to switch presently, we have a $3000 cash contribution offer."
That offer was available until November 14 but was subject to conditions.
Reserve Bank deputy governor and general manager for financial stability Geoff Bascand last month said its analysis indicates house prices are above their sustainable level.
Risks of a housing market correction are continuing to rise and the bank wanted to help reduce the number of highly leveraged borrowers and build resilience in the financial system, he said.