New data from ANZ shows a big increase in the number of first-home buyers turning to KiwiSaver to help them get into the property market.
ANZ, the country’s biggest KiwiSaver provider, said the number of withdrawals for a first home has increased by 188 per cent over the past three years as KiwiSaver balances increase and become an increasingly important part of the home buying equation.
In the year to March 2016, a total $148 million was withdrawn by ANZ’s KiwiSaver members to help them buy their first home. This compares with just $62 million in the prior year.
ANZ managing director retail and business banking and wealth John Body said more than 8000 customers made a first home withdrawal from their ANZ KiwiSaver accounts in the past year – almost double the number of withdrawals in the prior year.
“As KiwiSaver balances grow, more people are taking advantage of the option to withdraw some or all of their money to help buy a new home,” he said..
“The average first home withdrawal by our customers last year was $18,361, compared with $10,611 in 2013.”
The Government’s KiwiSaver rules enable people to withdraw their KiwiSaver money to help fund the deposit on their first home (excluding the Government’s $1000 kickstart and any savings transferred from an Australian super fund).
The Government also offers KiwiSaver HomeStart grants of up to $5000 to help purchase an existing home and double that to help fund new builds of first homes.
Body said it was great to see KiwiSaver helping people on to the property ladder but people needed to know how the system worked so they could take full advantage of the scheme.
“For instance you need to have been a member of KiwiSaver for at least three years before you can make a first home withdrawal.
“And, people wanting to apply for a KiwiSaver HomeStart grant would need to regularly contribute at least 3% of their income to KiwiSaver for a minimum three years in order to qualify for a grant.
“But you really make the most of this benefit when you have been contributing for five years because the Government will potentially give you $1000 for each year you have been contributing, up to a maximum of $5000 per person ($10,000 per couple).
“You can double that if you are looking to build your first home.”
Body also encouraged people to resume contributions to KiwiSaver after making a first-home withdrawal: “A first-home withdrawal can make a big dent to the total amount of money you have when you retire.
“It makes sense to resume contributions as soon as possible and consider increasing your contribution rate to ensure you catch up and achieve your retirement savings goal.
“This will ensure that saving for a comfortable retirement and owning your own home work hand in hand.”