Flatmates can now boost first-home borrowing power
Major banks have eased lending rules to help first-home buyers who rely on flatmates to meet mortgage repayments — allowing a declaration of intent to be used in place of a formal boarder agreement.
Westpac, ANZ and ASB are among the banks that now accept a simple signed statement from loan applicants who plan to take in a flatmate, instead of requiring a letter containing the flatmate’s name, address and signature.
The change has been welcomed as a timely intervention for first-time buyers struggling to meet servicing requirements, OneRoof reported.
It comes as property data firm QV describes current market conditions as a “rare opportunity” for first-home buyers, with values dipping and housing stock readily available. The Real Estate Institute also pointed to good pricing and low interest rates as favourable buying conditions.
Declarations give buyers flexibility
Geoff Christopher, a financial adviser at Float Mortgages, said the rule change made a big difference, particularly for buyers who couldn’t secure a flatmate before their purchase.
“A letter of intent signalled that the applicant planned to use a flatmate, but it didn’t necessarily hold them to it,” he said.
The flexibility means buyers can proceed alone if their circumstances improve after purchase — for instance, through a pay rise or spending cutbacks — though Christopher said flatmates remained a sensible option for those needing help with mortgage payments.
“This is not me saying, ‘Hey, use it and lie that you’ve got a flatmate’. Circumstances change, and the banks are not chasing you harshly for it,” he said.
He also applauded the move, noting it removed the risk of “someone fraudulently putting a name to a piece of paper just to get a home loan.”
Flatmates can boost borrowing power by up to $300k
Gareth Veale, director and mortgage adviser at GV Financial Services, said more first-home buyers were turning to flatmates to bridge income gaps and get loan applications across the line.
“They are pulling whatever strings they can to make it happen,” Veale said.
He said a flatmate paying $200 a week in rent could add around $150,000 to a borrower’s capacity, while two flatmates could boost it by $300,000.
“It’s huge,” Veale told OneRoof. “$150,000 could mean the difference between buying a s*** property and something decent.”
He and Christopher both noted that banks typically stress-test mortgage applicants at higher interest rates than market levels, which means many first-home buyers might realistically afford the mortgage solo once they move in.
Recent interest rate drops have also improved affordability, with two-year fixed rates falling from 7% to 5%, making a typical mortgage slightly more manageable — though still around $60 more per week than the national average rent.
BNZ has projected that these lower rates could deliver billions in mortgage savings, and CoreLogic said there’s a window where financing is cheaper — even if prices haven’t yet surged in response.
ANZ confirms support for intent declarations
OneRoof contacted ASB, Westpac, and ANZ for comment. Only ANZ responded, confirming that while no recent policy change had been made, declarations of intent are accepted in lieu of boarder details.
“There are times when customers are buying their first home, or building a property, when they may not yet have a boarder, but intend to get one when they move in,” an ANZ spokesperson said.
About one-third of first-home buyer applications to ANZ include boarder income, the bank said, adding that the boost in affordability could make a significant difference for new buyers.
“The extra money could be a big help in helping them realise their homeownership dream,” the spokesperson said.
