Foreign cash buys a piece of home

Mortgage brokers are reporting increased interest from New Zealanders overseas wanting a slice of the country's hot property market.

Immigrant customers of banks which have head offices in other countries - such as London-based HSBC - are also able to borrow against assets in their home country, taking advantage of cheaper interest rates.

Such arrangements are generally based on having a natural "hedge" - income or an asset valued in the same currency in which the money was borrowed.

Dave Mackay, a house hunter who has recently moved to New Zealand from Britain, said he was considering such an arrangement as he could secure a loan over property in England.

"I'm horrified by the interest rates here . . . you can get 2 or 3 per cent in the United Kingdom," he said. "It's something you've got to think about seriously, although you could get screwed by the exchange rate."

Banking experts say the idea might look good with current interest rates, but it is risky and does not guarantee long-term financial benefits.

HSBC's head of personal financial services, Paul Matthews, said people had to be careful about whether a deal would be cheaper long term as interest rates changed. The short-term benefits might look good, but if a borrower was going to be repaying the loan for 20 years those rate changes could outweigh any benefits.

Matthews said he did not know of customers who had borrowed from New Zealand in another currency.

Read More - Opens in a new window