The new rules of borrowing: Five insights every homeowner should know
Fresh analysis from property and analytics firm, Cotality, suggests several important shifts in New Zealand’ s mortgage market, pointing to rising confidence, improved affordability, and a clearer horizon for buyers and homeowners as we move into the new year.
Collectively, the data shows a market recalibrating after a volatile few years, with borrowers making more strategic choices as interest rates ease and policy settings loosen.
1. LENDING MOMENTUM HAS ACCELERATED
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 residential property purchases, refinancing and top-ups continues to strengthen, with the total value of outstanding home loans up 5.60 per cent over the past year- marking the fastest annual increase since August 2022.
20 per cent. Short fixed terms are similarly popular, with six-to-twelve-month fixes accounting for around half of all recent lending. Longer fixed rates, once the preference for certainty, now represent just 28 per cent of new loans.
The message is clear: flexibility is king, with rates near their recent lows but early signs of upward pressure building on longer terms.
3. FIRST HOME BUYERS ARE POWERING THE LOW-DEPOSIT MARKET
A record 51 per cent of first home buyers in September secured lending with less than a 20 per cent deposit. This group now makes up roughly 75-80 per cent of all lowdeposit owner-occupier lending. With loan-to-value ratio( LVR) settings easing from 1 December, access to finance for first home buyers is expected to improve further heading into 2026.
4. REFINANCING ACTIVITY STAYS NEAR RECORD HIGHS
Kiwis continue to shop around. Competitive cashback offers, sharper pricing, and shorter loan structures are driving elevated levels of refinancing, with many borrowers shifting lenders to capture better deals. With almost one in three new loans currently floating, and a large portion of fixed terms due to roll over between now and March 2026, refinancing volumes are likely to remain buoyant.
Source: S31 Loans by purpose, interest. co. nz
2. BORROWERS ARE PRIORITISING FLEXIBILITY AS RATES FALL
Borrowers are deliberately keeping their options open. Nearly 30 per cent of new loans this year have been written on floating rates, up from a long-term average of around
5. MORTGAGE STRESS IS LOW, AND FALLING
The proportion of Kiwis struggling to pay their mortgage has noticeably reduced over the second half of 2025, illustrated by the share of‘ non-performing loans’( overdue payments) easing to 0.6 per cent, and well below levels recorded during the Global Financial Crisis.
Lenders have started to reduce their bad-debt provisions, reflecting a growing confidence that the peak of repayment pressure has passed.
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