Five key insights into New Zealand’s mortgage market

New analysis from Cotality has highlighted several important shifts in New Zealand’s mortgage market, revealing how borrowers are responding to falling interest rates, easing policy settings and a steadily improving housing outlook. 

Below are five of the most relevant insights for buyers and homeowners.

1. Mortgage lending momentum is building

New mortgage lending has risen year-on-year in 24 of the past 26 months, as of September, signalling a clear lift in borrower confidence. Activity across house purchases, refinancing and top-ups continues to strengthen, with the total value of outstanding home loans up 5.6% over the past year. That marks the fastest annual increase since August 2022.

2. Borrowers are staying flexible to capture falling rates

Almost 30% of new loans this year have been taken out on floating rates, compared to the more typical 20% in previous years. Fixing for six to 12 months is also popular, accounting for around half of recent lending. Longer-term fixed rates, once dominant, now represent just 28% of new loans. The pattern is clear: borrowers want flexibility as interest rates continue to trend lower.

3. First home buyers remain a driving force

A record 51% of first home buyers in September secured lending with less than a 20% deposit. This group now makes up roughly 75-80% of all low-deposit owner-occupier lending. With loan-to-value ratio (LVR) settings set to loosen from 1 December, access to finance for first home buyers is expected to improve further heading into 2026.

4. Refinancing remains widespread

Borrowers continue to switch lenders at near-record levels, drawn by competitive cashback offers and the flexibility of today’s shorter loan structures. With nearly one in three new loans on floating rates and many fixed terms due to roll over by March 2026, refinancing activity is likely to stay elevated.

5. Repayment stress remains low

The share of non-performing loans has fallen to 0.6%, down from 0.7% earlier in the year and well below Global Financial Crisis levels. Banks have even begun trimming their bad-debt provisions, indicating growing confidence that repayment pressures have peaked.

If you know buyers or homeowners who would like help understanding what these trends mean for their borrowing options, I’d be grateful if you could refer them to me.