Mortgage brokers say a new shared ownership loan scheme to be offered by the BNZ is another option for home-buyers but won't be a silver bullet for solving the housing affordability issue.

The bank today announced it was launching a shared ownership schemein the New Year with an Auckland pilot targeting lending on new house builds.

Details of the scheme - which will see BNZ partner with a yet-to-be-named home finance company - haven't been revealed yet.

But in shared ownership schemes operated overseas, a buyer would typically put up 10 per cent of the deposit and the third party investor another 10 per cent, with the bank lending the remaining 80 per cent.


Buyers avoid paying the low-equity premiums they would be hit by if they'd borrowed more than 80 per cent but pay a fee to the third party for taking on the shared equity.

As the purchaser builds up capital, or is able to refinance, they can buy out the third party's stake at the current market value.

Paul Carter, chief customer officer consumer and wealth at the BNZ said the shared ownership scheme would give eligible customers an opportunity to get into their first home faster.

"Some New Zealanders are lucky enough to have mums and dads topping up their savings, so they can get the deposit to buy a house."

"Not everyone has family to call on in this way and that's where shared ownership could help," Carter said.

Bruce Patten, a mortgage adviser at Loan Market, said while it was good to have another option for home-buyers shared ownership was not going to be for everyone.

"Still the hardest thing for a client will be to get that first 10 per cent together."

Patten said he would rather see more lenders looking at 95 per cent lending again for the right-profiled clients, rather than a shared scheme.


"There are plenty of people, especially in Auckland, that can get the 5 per cent together, but 10 per cent just takes them that much longer if you are spending the average of $1million in Auckland."

Patten said people also needed to weigh up the cost of shared equity versus having a smaller deposit and paying a low-equity fee.

"The thing to be mindful of is that in a rising property value market, you will be paying out the third party funding a percentage of the capital gain when you go to pay them out, so you need to factor in, do I put in 10 per cent and pay a low-equity fee or do 20 per cent shared and pay an unknown amount in the future to release the third?"

John Bolton, chief executive of Squirrel Mortgages, also questioned what would happen in a market where there wasn't much capital gain to be made.

"What happens in a soft housing market? How strong a market is there going to be for shared equity in a market that is through its peak?"

The New Zealand property market has flattened off in the past 18 months and there are concerns prices in Auckland may fall on the back of drops in Sydney and Melbourne's housing markets.

Bolton said shared equity would also not solve the fundamental issue for first-home buyers, which was affordability.

"Most first-home buyers have got some sort of deposit with KiwiSaver."

Easing the loan-to-value ratios next year should also make it easier for more people to get in the door with a smaller deposit.

"We are not finding the deposit is an issue. It's more around servicing."

If a buyer could not service that level of debt then someone else topping up the deposit may not make much difference, he said.

"Is this going to make a difference because these people are going to be pretty stretched?"

Bolton said he believed entry-level house prices needed to fall and that meant developers, builders and the Government needed to do a better job of delivering low-cost homes.

"This is good around the fringe but is not fundamentally solving the issue."

Bindi Norwell, chief executive at the Real Estate Institute of New Zealand (Reinz), said shared-equity models had proven to be successful overseas and were a good way to help first-time buyers to get on to the market.

"Reinz is supportive of measures that help Kiwis to get a foot on the property ladder – particularly as home ownership is at its lowest level in 60 years and house prices are continuing to rise around much of the country, continuing to put housing affordability out of the reach of many."

Norwell said the models could go a long way towards helping people who might otherwise be locked out of the market.

"In Auckland, with a median house price of around $850,000, for first-time buyers looking at a lower-quartile house around the $650,000 mark that means saving a deposit of around $135,000, which for people on an average wage will take 16 years – this is just unsustainable."