Home loan affordability for Tauranga is deteriorating according to the latest Roost Home Loan Affordability report.

The report took wage figures from the Inland Revenue Department and Statistics New Zealand and combined them with interest rates of banks and other financial institutions to determine this.

First home buyers are going to have difficulty raising the money to enter the market.

It shows it takes 58.6 per cent of one median income to pay the mortgage on a median priced house purchased in Tauranga in March.

This is up from 56 per cent in February, with both figures well over the 40 per cent line – the line of what is considered ‘unaffordable'.

The median house price in Tauranga was $360,000 and the median weekly after tax income was $715.10.

The New Zealand medians were $365,000 for house price and $790.87 for wages.

Auckland central and the Kapiti Coast are the only two other areas in New Zealand to see home loan affordability deteriorate in the latest month on month analysis.

A loosening of lending criteria and more intense competition for mortgage lending by the banks are believed responsible for the overall improvement in affordability in New Zealand.

'The banks are competing harder than ever for business, which is improving the prospects for first home buyers in particular,” says Roost Home Loans spokeswoman Rhonda Maxwell.

Some banks are offering loan to value ratios of up to 90 and 95 per cent and giving interest rate discounts when in competitive situations, Maxwell said.

'The increased willingness of some banks to go the extra mile with fee discounts and interest rate reductions is encouraging some new home buying.”

Read the full Tauranga report here.