LENDING AND INTEREST RATES
The single most influential factor in the housing market is interest rates.
With two-year fixed mortgage rates falling below five per cent, borrowing conditions are the most favourable they’ ve been in years. For many households, this is unlocking capacity they had previously sidelined.
“ Buyers have adjusted to the‘ new normal’ of rates sitting in the five per cent range, rather than the twos and threes we saw during the pandemic. What matters is not the comparison to historic lows, but the fact that lending rates are easing, not rising. That shift is hugely important for confidence.”
For sellers, the relevance is clear. Easing rates embolden buyers to transact, reduce hesitation, and expand the pool of qualified purchasers.
Beyond mortgage pricing, bank test rates – the buffer rates used to assess borrower affordability – have been edging lower. This allows more buyers to qualify for finance at higher levels. Bringing greater depth to the buyer pool.
Coulson says that when test rates come down, it doesn’ t just mean cheaper repayments; it means more people can access lending, and those who could already borrow can bid with more confidence.
“ Sellers can recognise that this shift is expanding the market of genuine buyers.”
Additionally, mortgage brokers are reporting renewed bank appetite for mortgage lending. Recent RBNZ data highlights record refinancing activity, with households shopping around for sharper offers, and banks competing aggressively to win the business.
“ This is a very different dynamic from the restrictive lending environment of 2022 and 2023,” Coulson explains.“ We’ re seeing higher approval rates, greater willingness to work with borrowers, and new products designed to attract both first home buyers and investors.”
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