- ANZ is offering a low-interest Reno Loan for homeowners to borrow up to $50,000 at 2.5%.
- The loan targets customers with at least 20% equity, aiming to kick-start renovation projects.
- ANZ's Emily Mendes Ribeiro said accessing finance for renovations was a major hurdle for homeowners.
One of New Zealand’s biggest banks is targeting renovators with a new low-interest home loan.
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From Monday, homeowners can borrow up to $50,000 at a three-year fixed rate of 2.5% with ANZ's Reno Loan.
Emily Mendes Ribeiro, from ANZ's home lending team, told OneRoof that the bank had canvassed its existing home loan customers and found that accessing finance for renovation work was a big headache.
Of those who planned to renovate in the next few years, a large number said cost was holding them back.
Mendes Ribeiro was hopeful that the loan would help to kick-start its customers' home-renovation projects.
ANZ is the first NZ bank to offer a loan targeted specifically at renovations. Photo / New Zealand Herald
“The survey indicated that there are lots of people interested in renovating at the moment, and we think there’s an opportunity [to help them]. The housing market has been a little bit slower, and so people might want to renovate the place they live in to get some joy out of it.”
The ANZ Reno loan is aimed at home loan customers with at least 20% equity. Compared to the standard rates for home loan top-ups, the ANZ Reno loan rate could save customers up to $2000 in interest payments over the three-year term.
The loan follows moves by the country's banks to offer low-interest rate "green loans" for sustainable home upgrades or electric vehicles.
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The post-Covid housing market slump has put the brakes on New Zealand's movers, with many homeowners preferring to stay put rather than risk selling at a loss or for a lower price.
“When times are uncertain, people often delay big decisions like moving house or building new,” ANZ senior economist Matthew Galt said, citing the 20% drop in house values since market peak in 2021.
Galt added: “Renovations tend to be one of the steadier parts of the housing market through economic ups and downs."
While the number of consents for newbuilds had fallen by around 33% since peak, the drop in consents for residential alterations and additions had declined only 21%.
ANZ general manager homeowners Emily Mendes Ribeiro: "The housing market has been a little bit slower, and so people might want to renovate the place they live in to get some joy out of it.” Photo / Supplied
“There are now early signs that interest in renovations is increasing following the fall in interest rates,” Galt said.
Rachel Radford, a spokesperson for Builderscrack, an online marketplace that matches tradies with jobs, agreed that cost was the biggest barrier to home renovations. However, its own survey of homeowners found that most used their savings to fund renovations rather than borrowing.
“It suggests many homeowners are planning and setting money aside before getting started,” she said.
Squirrel Mortgages South Island managing adviser Nathan Miglani told OneRoof that cost-of-living pressures might put off Kiwis from adding to their debt.
“I don’t think people will be jumping onto this one straight away, and that’s just cost of living, the uncertainty.”
Miglani said most of the major banks were still offering a 1% interest rate for sustainable upgrades such as solar panels and double glazing, so he expected people would look to utilise this first.
However, he said it could be an attractive option for homeowners who had good job security and wanted to upgrade their bathroom or kitchen, especially as home loan rates were starting to jump up.
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