Emma Page in the Sunday Star Times advises first-time home buyers not to despair - banks might be tightening their lending criteria but it's not all bad news for those struggling to get on the property ladder.

Experts say the buffer zone of a larger deposit could save potential homeowners from trouble in the future and it also reduces weekly repayments, taking the sting out of household budgets.

"There would be some argument that this move by the banks could be protecting first-time buyers from potentially risky purchases," says Massey University banking lecturer David Tripe.

And as house prices grind to a standstill with further drops predicted, BNZ chief economist Tony Alexander says would-be home owners can take the time to save without fear of prices climbing. Market conditions also mean lower rental prices another bonus for those trying to save. "You've got a good market in which to bargain to get a reduced rent and work on getting that deposit up."

But there is no denying that tightening the lending criteria does drastically reduce the amount of money people can potentially borrow. Last week ANZ National, the largest bank in New Zealand, announced it now requires a 20% deposit for all new loan applications.

Most of the other major banks have a similar policy, preferring a 20% deposit and assessing other applications on a case by case basis.

Bernard Hickey, from interest.co.nz, said that when the financial markets were liquid, banks were happy to lend to people with just a 5% deposit, meaning a couple with $30,000 in the bank could borrow enough to buy a $600,000 house.

Now, the same couple would be looking at a $150,000 home. "You've gone from a four-bedroom villa to a studio."

But ASB head of retail banking Ian Park says the requirement for a 20% deposit used to be common practice.

"I don't see it affecting home ownership too much in the long term."