Kiwibank has pulled the pin on pre-approved home loans, leaving hopeful first-home buyers in the lurch.
Newshub has obtained correspondence from Kiwibank saying it is no longer "able to accept pre-approval applications" for mortgages worth 80 percent or more of a property's value - effective immediately.
One first-home buyer, who has asked to remain anonymous, is gutted after finding out Kiwibank won't approve their mortgage application.
"I'm just really disappointed," he tells Newshub.
He and his family have been desperately trying to get on the property ladder for a year.
"I didn't expect to have the rug pulled out from under my feet."
He's one of many hopeful home buyers who may now have nowhere to go for a home loan.
"It destroys the dream of many first-home buyers - particularly those that are scrimping and saving to get those 10 or 15 percent deposits. At the moment it just shuts them completely out of the market," says LoanMarket mortgage advisor Grant Patten.
"It's impacting the people both the Government and the Reserve Bank have openly said they're trying to help."
In a statement, Kiwibank told Newshub it's empathetic to first-home buyers, but constrained by the Reserve Bank. The regulator has slashed the number of risky loans banks are allowed to give to home buyers with smaller deposits to just 10 percent of their lending.
Kiwibank is already close to that limit and probably isn't the only bank.
"They've already cut off a lot of their lending as it is, apart from live deals, so I would expect it to happen more as the weeks go past," Patten says.
