Diminishing KiwiSaver balances tip up first home buyers

Mortgage brokers say they are hearing from many first-home buyers wondering what to do about the slump in their KiwiSaver balances caused by US President Donald Trump's tariff war.

Tuesday, April 29th 2025, 8:34AM

by Sally Lindsay

Mortgage brokers say they are hearing from many first-home buyers wondering what to do about the slump in their KiwiSaver balances caused by US President Donald Trump's tariff war.

At the beginning of the month Trump declared a 10% baseline tax on imports across the board from April 5 plus enormous taxes on China and other countries deemed to be in a trade imbalance with the US.

It sent share markets globally into a freefall and created extraordinary volatility and uncertainty in bond, equity and currency markets.

Whangarei-based Key Mortgages Jeremy Andrews says some first home buyers who were on the edge of the deposit they required to buy a house got tipped up because their KiwiSaver balances slid backwards.

They have had to look at putting in a bit more into a deposit in terms of their own savings or finding other funds just to get back to where they were, he says.

The majority of first home buyers have some if not most of their deposit coming from KiwiSaver.

Andrews says most advisers will suggest before buying a house borrowers put most of their KiwiSaver into a more conservative rather than a high growth fund to avoid the risk of it dipping too much while Trump’s tariff war plays out.

Hastie Mortgages owner Campbell Hastie agrees. While it won’t be affecting all buyers, he says the riskier the KiwiSaver fund a borrower is in the more impact it will typically have on the house buying options available.

Hastie had a couple of clients who didn’t switch to a conservative fund and chose to leave their KiwiSaver in a growth fund and lost quite a bit of their deposits. “When it came time to buy a house they had to find another way to build back their funds for the deposit.

“One client was able to get family to help with gifted funds and the other had to build up further savings to make up for the dip of $2,000-3,000 in their KiwiSaver accounts.”

Hastie says the higher amount a borrower has in KiwiSaver the bigger the impact. “On a $10,000-20,000 account it might only be a few grand, but on a $100,000 plus account it will be getting into a five figure difference.”

Andrews and Hastie strongly encourage anyone who hasn’t sought KiwiSaver advice to do so, particularly if they are planning to use it towards a first home deposit. It is important they choose a fund to suit their goals, they say.

Low deposits

There are still good bank options for first home buyers, Andrews says. All banks have some options for borrowers with a 10% deposit and some even with a 5% deposit.

A couple of banks have just increased their monthly surplus required to get lending with a 10% deposit, so that is making the marginal borrowers just dial back a bit on how much they can afford, unless they can save a bit more or find some other income, he says.

Living costs are also increasing, which is having an impact. “That is probably why house prices haven’t lifted as much, or in some cases haven’t increased at all compared to last year.”

Hastie says because house values have not increased as much as expected, some first home buyers have not been forced to borrow at a high loan to value ratio )LVR) as they would have been several years ago.

“Three years ago, some first home buyers might have been borrowing at a 90% LVR but those same buyers are probably now taking out a mortgage at an 85% or 84% LVR. That’s a function of property values having come back.”

He says it is important to remember that other events – and not just Trump’s tariff wars will affect KiwiSaver in the same way.

“He will be removed from office at some point, and so he will be behind us. And then something else will come along and affect KiwiSaver balances. The last one was Covid. Obviously, that changed people's Kiwisaver balances to the same extent.”

Hastie says potential home buyers must be mindful of that if they are going to use KiwiSaver to purchase a home.

Tags: first home buyers KiwiSaver