Is it harder to buy a house once you're 40?

Rachel Parangi and her husband Jason did not think seriously about home ownership until they were in their mid-40s.

They bought their first home, in Whangārei, in April.

"We basically thought 'we've got some money in KiwiSaver, we've both got steady jobs we've been in a while, let's see if we could buy a house'… we didn't think much about it, but then I said to [my husband] maybe we should try - we kept seeing rents go up," Parengi said.

They went to see a broker who told them to start looking.

She said it was more expensive than renting but it was worthwhile to have an asset for their family.

They had to take a 24-year mortgage, rather than a full 30-year term.

She said the decision to withdraw all their money from KiwiSaver meant they were starting again when it came to retirement planning, but that was not a focus at the moment. They did not want to be renting for life.

"Our kids' ages range from 16 to 25, so we've still got a lot of supporting them we need to do, so I wanted to have an asset if we could."

The country's largest bank, ANZ, said the average age of its first-home buyers was now 35. BNZ said about 45 percent of its first-home buyers were early to mid-30s. Westpac said its average age for a first home was also 35.

Credit bureau Centrix said earlier in the year the average age of a first-home buyer was 37 - it had fluctuated from 37.6 at the start of 2018 to 35.7 years in the fourth quarter of 2021. That average is roughly ten years later in life than where it sat in the 1970s.

Last year the median age of women giving birth was 31.3. The median age of first marriage or civil union in 2013 was 30.4 for women and 31.6 for men.

For many first-home buyers, like Parangi, that means clearing out KiwiSaver to form a deposit, and then starting retirement savings again. Kernel KiwiSaver founder Dean Anderson said $9.4 billion had been withdrawn from the scheme over the past decade for house purchases.

The average withdrawal was just over $30,000.

"For many, the tangible benefit of using their savings today to buy a house feels more relatable than focusing on a vague and

far off sense of retirement.

"While it can be a lifeline for securing a home, is KiwiSaver's role in funding immediate needs like homeownership pulling focus from its core purpose-building long-term retirement security?"

Rupert Carlyon, founder of Kōura KiwiSaver, said people who withdrew money for a first home in their late 30s or 40s would end up with less money at retirement than someone who did so earlier.

"Someone earning $80,000, if they take out a house withdrawal at 30, they will end up with $715,000 at 65, if they do the same at 35 then they will have only $492,000 - a difference of $230,000."

But he said going into retirement without a home was not a good prospect either: "And potentially outweighs the costs to your KiwiSaver nest egg and retirement.

"The mortgage payments on a house often act as a significant saving mechanism in their own right, and by owning the house you are no longer exposed to growing rents."

David Boyle, general manager of KiwiSaver at Fisher Funds, said people would need to focus on getting back on track for retirement once the purchase was made.

"For a lot of those that have emptied out that dollar value for their first home, the majority maintain their contributions. If they don't, if they go on a contribution holiday, they could lose that 3 percent pay rise from their employer from their contributions."

He said owning a home would put people in a better position at retirement.

Having a house purchase out of the way also made it easier for people to decide which fund to be in when they returned to saving.

"It would give the KiwiSaver member the ability to go into something more aggressive, because they've still got at least maybe 30 years to kind of unlock that wealth creation through a more equity-based portfolio.

"It takes the noise off the table, because you can't use the money for anything else after that until you're 65.

"You've got to get the balance right around the repayments on your mortgages, but we know over time people's salaries go up."

Their homes should increase in value, too, he said.

Certified financial planner Paul Sewell, from Financial Advice Hawke's Bay, said he would counsel people to get rid of their debt as quickly as possible.

"The likelihood, though, is that you end up with debt into your 50s, 60s, and possibly overlapping into retirement. The solution for that is you might be able to work longer."

He said people who did not own homes usually had worse outcomes because they often ended up not saving or investing enough elsewhere to cover the difference at retirement.

"For a lot of people, if they don't have that commitment [to make the mortgage payment], their spending tends to be greater."

Mortgage broker Glen McLeod, of Edge Mortgages, said it was common to see banks reduce the length of mortgages as people got nearer 50, as Parangi's did.

"Some have a policy where [the loan term] has to be in line with your retirement age, but you can get away with 70 in some cases."

He said sometimes banks would accept that people planned to sell an asset at retirement to pay down debt.

"With rates high at the moment, as they come down you can leave your repayments higher and pay things off faster."

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