Kiwibank’s chief executive, Steve Jurkovich, says one of the big surprises from the research of 2008 respondents shows 57 per cent of boomers (people aged 60-plus) feel locked out of the market, compared with 70 per cent of millennials (aged 30-44); 63 per cent of Gen X (aged 45-59) and 59 per cent of Gen Z (aged 18-29).

“Millennials feeling locked out probably made sense, but when you compare the figures, there is not much between Gen Z, boomers and Gen X. The outlier was the boomers who feel like they have been locked out of the market or left behind,” he says.

Jurkovich says as people live and work longer, the bank has had to review some of its policy settings to be more realistic about retirement being further off for some.

“Boomers are also interested in what they can do on the housing front and age discrimination is not allowed to enter into mortgage negotiations.”

Rent-to-own emerged as the most attractive option at 66 per cent, followed by co-ownership at 44 per cent, and community housing at 33 per cent.

While Kiwibank doesn’t grant mortgages on an individual basis on rent-to-own properties, it is behind rent-to-own businesses, usually started by community organisations.

Jurkovich says if the report can create more visibility and interest in rent-to-own schemes, it might help attract more capital in the sector.

“All of a sudden people starting a rent-to-own scheme might have a chance to make it work.”

Jurkovich noticed from the research that banks and other mortgage providers need to do a better job of making sure people are aware of all options. “Not knowing about the options means customers, or potential customers, are feeling like they’re locked out.”

Co-ownership

Of those open to considering co-ownership, the most appealing factors include shared expenses (45 per cent), the ability to use it as a stepping stone (40 per cent) and entering the market earlier (36 per cent).  

However, the question for the broader industry is: “Could we do a better job of letting people know there are more options than what was traditionally referred to as the bank of mum and dad?”

The report says the main barriers preventing non-homeowning Kiwis from stepping onto the property ladder are high house prices (59 per cent) and the rising cost of living (58 per cent). Many also struggle to save for a deposit (44 per cent), while high interest rates (35 per cent) and low wages (33 per cent) compound the difficulties of buying a first home.

Data from 2004 to October this year shows the average two-year interest rate has been 6.21 per cent. Today, Kiwibank’s two-year special is 5.69 per cent, so interest costs are very close to the 20-year average.

“But what that doesn’t say is not that long ago mortgage holders might have been borrowing at two point something per cent. So, the sharpness of interest rate rises over the past 18 months really caught people.

“While the interest rates are now close to the average of the long run, people still feel the pinch, particularly when living expenses have taken a huge chunk out of discretionary income.”

Jurkovich says while simplification of the CCCFA rules have helped banks and borrowers, the ultimate market test is confidence – how people feel they can get into the market and what’s going to happen.

“It feels like it is better than it has been for a while and if there is an OCR cut of 0.50 per cent before Christmas it will feel better again.”