Kāinga Ora & CCCFA: What the latest changes mean for first home buyers

First Home Buyers Written by John Bolton, Jul 15 2022
Post by John Bolton - Squirrel Founder

Post by John Bolton - Squirrel Founder

If you're more of a watcher than a reader, make sure you check out the filmed version of this update, up above. 

The long-awaited return of choice to the housing market isn’t the only thing going on right now that’s great news for prospective first home buyers.

Throw in new changes to the Kāinga Ora First Home schemes, and amendments brought in earlier this month to start to reverse the crippling impact of 2021’s new CCCFA legislation, and there’s a fair bit to be feeling positive about.

(Marking a nice change from recent years, if we’re honest.)

Here’s what you need to know.

Let’s kick things off with a quick update on interest rates and house prices.

On the interest rates front…

As the impact of recent rate increases continues to make itself sorely felt, the financial markets are increasingly of the view that the New Zealand economy is going to slow down much faster than expected.

That’ll likely mean the OCR doesn’t go up as high, or as quickly, as we once anticipated – which is taking a lot of pressure off fixed mortgage rates.

In recent weeks, we’ve already seen signs of wholesale interest rates beginning to fall, and that’s started trickling through for consumers with some major lenders cutting their two-year fixed term rates.  

While the OCR is still likely to keep going up by another 1.5% or so, that peak has already been fully priced into current mortgage rates.

All of that suggests that home loan rates should settle between 5.50% and 6.00%, which will ease some of the sense of panic we’re seeing out there at the moment.

And in terms of house prices …

We’re already seeing absolute prices (or listing prices) in the market down about 10% from peak last year. That’s the reality, but it’s not being reported in the news just yet. I’m not expecting absolute prices to fall much further.

Factoring in the impact of inflation on “real” house prices, you’re looking at a drop of up around 20% - but that inflation-adjusted drop is kind of meaningless other than that it’s helping to improve affordability in the long run.

The market is still a little bit scary at the moment, but I will say with all the choice that’s out there (a result of fewer people being out to buy) it does feel like there’s a real opportunity to get into the market. 

Changes to Kāinga Ora caps remove hurdles for more first home buyers 

As part of the budget announcement in May, the NZ government brought in some fantastic changes to its Kāinga Ora First Home schemes, reflecting the major shifts that have taken place in the housing market in recent years. 

First off, Kāinga Ora have introduced a third category under their income cap eligibility criteria, for solo income earners with dependents. This means solo caregivers are now eligible with earnings of up to $150,000 – the same as the cap for two or more earners, and significantly up on the $95,000 cap for an individual buyer.

Kāinga Ora First Home Loans

The REAL gold for first home buyers is the removal of house price caps on Kāinga Ora’s First Home Loan scheme, which lends to borrowers who have as little as 5% deposit saved.

It’s underwritten by Kāinga Ora, working in partnership with a select number of NZ banks.

As the borrower, you have to pay a 1% low deposit fee, but otherwise get special rates from the banks. It’s a super competitive, well-priced home loan product that’s perfect for the low deposit space (which has been really tough in recent months).

With the removal of house prices caps, the only limit is around those income caps I talked about before.

As long as you fall under those, the First Home Loan Scheme is something that’s well worth looking into – as the recent changes have unlocked a whole lot more of the market (and therefore choice) for first home buyers around the country.

Kāinga Ora First Home Grants

Kāinga Ora’s First Home Grant programme offers eligible borrowers up to $10,000 of free money (woohoo!) towards their house deposit.

The key change here is a significant increase on house price caps for eligible properties.

In Auckland, the cap’s been bumped up to $875,000 for both existing properties and new builds – up from $625,000 and $700,000 respectively – bringing a whole lot more properties within eligibility criteria (particularly terraced townhouses, if that’s where you’re looking).

The table below details regional house caps below for other main centres, or you can check out the Kāinga Ora website for an extensive list.


Existing properties

New builds
















Dialing back of CCCFA changes also making life easier

Things were dire in the immediate wake of the CCCFA changes being introduced, but it’s fair to say that lenders have gotten much better at navigating those changes in recent months.

And on the 7th July, a series of amendments were introduced to start formally winding back the unintended consequences of the new legislation, which will help make things a little bit easier still.

We haven’t got all the changes we were hoping for on this front just yet, but it’s a start – and the changes we’ve seen to date will certainly help to make it easier for first home buyers to get into homes.

If reading this has inspired you to get the house hunt underway, get in touch with us. Our advisers are at the ready to answer any questions and help you through the house buying journey.

The opinions expressed in this article should not be taken as financial advice, or a recommendation of any financial product. Squirrel shall not be liable or responsible for any information, omissions, or errors present. Any commentary provided are the personal views of the author and are not necessarily representative of the views and opinions of Squirrel. We recommend seeking professional investment and/or mortgage advice before taking any action.

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