That is about 2.55% below the available two-year fixed mortgages in the market.

Squirrel says it has done this because it’s a challenging market to buy in.

“With mortgage rates up over 6%, and a cost-of-living crisis that just keeps getting worse, there are some major financial considerations, and hurdles, to be factored into the equation, says David Cunningham, Squirrel chief executive.

“It’s scary for buyers, especially anyone hoping to get into their first home. 

“And we’re seeing a lot of Kiwis are left feeling like they’ve got no choice but to step back from the market, put their plans on hold, and wait it out until things are a little less volatile,” Cunningham says.

Squirrel, Avant and Te Ākitai Waiohua say the deal is a first of its kind in New Zealand – a way to help remove some major financial barriers faced by buyers, provide some confidence,give more monthly cash flow for living expenses and help get more Kiwis into high-quality, affordable homes.

Cunningham says the subsidy is lender-agnostic.

That means eligible buyers are able to get the discount no matter which bank or lender they sort their mortgage through.

He says that’s only possible because Squirrel’s advisers have relationships with every major lender in New Zealand, which means they can give buyers access to more options.

Once the mortgage is locked in, buyers make their standard mortgage repayments, as they normally would, at the applicable two-year fixed interest rate agreed with their bank.

Then, buyers are reimbursed the difference between the applicable two-year fixed rate they’re paying, and a rate of 3.95%.

For a buyer purchasing a $650,000 home, with a 5% deposit saved and a mortgage of $617,500, it means they’ll save around $30,492 over the first two years of their mortgage.

That’s almost $1270 a month.

Subsidy payments are made into the buyers nominated bank account either fortnightly, or monthly, in line with the frequency of mortgage repayments.

The subsidy is funded solely by Avant (the lead developer of the Wirihana neighbourhood) with funds held on trust with, and paid out by Squirrel.

KiwiBuild is providing underwriting support for up to 97 homes as part of Wirihana’s stage 1 development. Prices start from $650,000.