Over the past few years, the mortgage and housing markets in NZ have been on a wild ride. As the Official Cash Rate was slashed to a record low of 0.25%, mortgage interest rates slumped. In the opposite direction, house prices surged as the market became awash with cheap money and, as a result, home loan lending peaked.
But, oh, what a difference inflation can make. The OCR now stands at 5.5%, although, hopefully, the only way from here is down. Certainly, households with mortgages could welcome some relief.
In August 2021, the average one-year fixed rate for owner-occupiers on Canstar’s mortgage database was 2.58%. At time of writing (22/12/23), the same rate is 7.49%.
→ Related article: Lowest Mortgage Rates in NZ
Due to rising interest rates, since 2021’s house-price high, the market has cooled considerably. In November 2021, according to REINZ, the median national house price was $925k, in November 2023 it was $790k, a 15% drop, and down 2% on last year’s figure.
And in Auckland the property market slump has been more pronounced: the median house price in Auckland during November 2023 was $1.052m, that’s down 20% on 2021’s median price and 1% lower than the same time last year.
Reflecting this drop, the latest Reserve Bank figures reveal mortgage lending was nearly a third lower in November 2023, compared to November 2021: a drop of 28%, from $9.121m to $6.539m.
However, the green shoots of a housing market recovery are there. For compared to November 2022’s mortgage lending ($6055m), this year’s total mortgage lending is up 8%.
It’s a rise that goes hand-in-hand with an uptick in the number of new mortgages: there were 17,700 new mortgages issued in November 2023, compared to 16,701 last year, which is an increase of 6%. And it’s growth generated primarily by the number of first home buyers and investors in the market, up 17% and 13%, repectively (see below).
As a result, the average new home loan in New Zealand in November rose slightly to $369,435, a 2% increase compared to lending in November 2022, when the average mortgage was $362,553.
Total Home Loan Borrowing
| Total lending ($million) | Nov 2021 | Nov 2022 | Nov 2023 (YoY%) |
|---|---|---|---|
| All borrower types | $9121 | $6055 | $6539 (8%) |
| First home buyers | $1739 | $1357 | $1558 (15%) |
| Other owner-occupiers | $5760 | $3656 | $3770 (3%) |
| Investors | $1527 | $957 | $1138 (19%) |
| Business purposes | $95 | $84 | $73 (-13%) |
| Higher than 80% LVR lending ($million) | |||
| All borrower types | $824 | $567 | $685 (21%) |
| First home buyers | $640 | $440 | $530 (20%) |
| Other owner-occupiers | $177 | $121 | $140 (16%) |
| Investors | $4 | $6 | $15 (150%) |
| Business purposes | $3 | $1 | $0 (-100%) |
| Less than or equal to 80% LVR lending ($million) | |||
| All borrower types | $8297 | $5488 | $5853 (7%) |
| First home buyers | $1099 | $918 | $1027 (12%) |
| Other owner-occupiers | $5583 | $3536 | $3630 (3%) |
| Investors | $1523 | $951 | $1123 (18%) |
| Business purposes | $92 | $83 | $73 (-12%) |
| Lending to investors ($million) | |||
| Total lending | $1527 | $957 | $1138 (19%) |
| Higher than 70% LVR lending | $153 | $157 | $214 (36%) |
| Less than or equal to 70% LVR lending | $1374 | $800 | $924 (16%) |
First Home Buyer Loan Rates
If you’re currently considering a home loan, the table below displays some of the 2-year fixed-rate home loans on our database (some may have links to lenders’ websites) that are available for first home buyers. This table is sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Products shown are principal and interest home loans available for a loan amount of $500K in Auckland. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products. Canstar may earn a fee for referrals.
Number of Home Loan Borrowers
Across all borrower types, except business purposes, the increase in the dollar value of total mortgage lending has moved roughly in step with the number of new mortgages issued. And it’s interesting to see the strength of both FHB and investor lending compared to other owner-occupiers:
| Total No. Borrowers | Nov 2021 | Nov 2022 | Nov 2023 (YoY%) |
|---|---|---|---|
| All borrower types | 23,172 | 16,701 | 17,700 (6%) |
| First home buyers | 2959 | 2390 | 2804 (17%) |
| Other owner-occupiers | 17,079 | 12,069 | 12,408 (3%) |
| Investors | 2835 | 1977 | 2226 (13%) |
| Business purposes | 299 | 265 | 262 (-1%) |
| Higher than 80% LVR lending | |||
| All borrower types | 1289 | 878 | 1131 (29%) |
| First home buyers | 1003 | 684 | 854 (25%) |
| Other owner-occupiers | 277 | 181 | 246 (36%) |
| Investors | 7 | 10 | 26 (160%) |
| Business purposes | 2 | 3 | 5 (67%) |
| Less than or equal to 80% LVR lending | |||
| All borrower types | 21,883 | 15,823 | 16,569 (5%) |
| First home buyers | 1956 | 1706 | 1950 (14%) |
| Other owner-occupiers | 16,802 | 11,888 | 12,162 (1%) |
| Investors | 2828 | 1967 | 2200 (12%) |
| Business purposes | 297 | 262 | 257 (-2%) |
| Lending to investors | |||
| Total lending | 2835 | 1977 | 2226 (13%) |
| Higher than 70% LVR lending | 246 | 264 | 325 (23%) |
| Less than or equal to 70% LVR lending | 2589 | 1713 | 1901 (11%) |
Average Home Loan Borrowing
| Average Mortgage | Nov 2021 | Nov 2022 | Nov 2023 (YoY%) |
|---|---|---|---|
| All borrower types | $393,622 | $362,553 | $369,435 (2%) |
| First home buyers | $587,699 | $567,782 | $555,635 (-2%) |
| Other owner-occupiers | $337,256 | $302,925 | $303,836 (0.3%) |
| Investors | $538,624 | $484,067 | $511,231 (6%) |
| Business Purposes | $317,726 | $316,981 | $278,626 (-12%) |
| Higher than 80% LVR lending ($million) | |||
| All borrower types | $639,255 | $645,786 | $605,659 (-6%) |
| First home buyers | $638,086 | $643,275 | $620,609 (-4%) |
| Other owner-occupiers | $638,989 | $668,508 | $569,106 (-15%) |
| Investors | $571,429 | $600,000 | $576,923 (-4%) |
| Business Purposes | $1,500,000 | $333,333 | 0 (-100%) |
| Less than or equal to 80% LVR lending ($million) | |||
| All borrower types | $379,153 | $346,837 | $353,250 (2%) |
| First home buyers | $561,861 | $538,101 | $526,667 (-2%) |
| Other owner-occupiers | $332,282 | $297,443 | $298,471 (0.3%) |
| Investors | $538,543 | $483,477 | $510,455 (6%) |
| Business Purposes | $309,764 | $316,794 | $284,047 (-10%) |
| Lending to investors ($million) | |||
| Total lending | $538,624 | $484,067 | $511,231 (6%) |
| Higher than 70% LVR lending | $621,951 | $594,697 | $658,462 (11%) |
| Less than or equal to 70% LVR lending | $530,707 | $467,017 | $486,060 (4%) |
Average Home Loan Repayments
However, while average mortgages have increased only slightly over the past year, interest rates have risen for more steeply. At the end of November 2022, the average 1-year fixed rate on Canstar’s database was 6.13%, this year it was 7.5%.
Feeding these figures into Canstar’s home loan repayment calculator, it’s clear to see that a further recalibration of house prices and/or interest rates is needed to improve housing affordability. For while average mortgages have risen 2%, the repayments on these mortgages have increased up to 15%.
However, fingers crossed, over the next year we should see interest rates start to come down. A couple of the big banks have already reduced their longer-term rates. And, as the economy continues to contract, hopefully, the OCR and shorter fixed-term rates will follow.
The following calculations are for a loan repayment on principal and interest, paid monthly over 25 years. For the investor figures, we’ve used the Canstar database’s average one-year investor rates of 6.48% (Nov 2022) and 7.68% (Nov 2023).
Estimated monthly repayments on an average new home loan
| Lender | Average mortgage/repayments Nov 2022 @ 6.13% |
Average mortgage/repayments Nov 2023 @ 7.5% |
|---|---|---|
| All borrower types | $362,553– $2365/m | $369,435 – $2730/m |
| First home buyers | $567,782 – $3704/m | $555,635 – $4106/m |
| Other owner-occupiers | $302,925 – $1976/m | $303,836 – $2245/m |
| Low-equity average mortgage | $645,786 – $4212/m | $605,659 – $4476/m |
| Investors (4.71%/7.35%) | $484,067 – $3157/m | $511,231 – $3778/m |
So, if you’re looking to buy a property, how does your possible mortgage compare with the current averages, and what type of rate is your lender offering?
For example, on Canstar’s comparison tool, 1-year fixed rates start at 6.99% and top out at 8.3%. So for canny consumers who are prepared to do their homework and search out the lowest mortgage rates, there are still savings to be made.
Compare with Canstar for the Cheapest Mortgage Rates
But while the cheapest interest rates are important. When looking for the best mortgage, you do need to look at more than just interest charges. When Canstar compares and rates mortgages and mortgage lenders, our expert researchers look at each home loan and awards points for the array of features it offers and its comparative price, which includes rates and fees.
The best products then receive our 5-Star Ratings for Outstanding Value. We place a lot of importance on our ratings, which is why the comparison grids below are sorted first by Star Rating, highest to lowest. However, if you want to compare by lowest rates instead, just click through to access our full mortgage rate comparison tables.
Best Mortgage Rates for Refinancing
The table below displays some of the 2-year fixed-rate home loans on our database (some may have links to lenders’ websites) that are available for home owners looking to refinance. This table is sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Products shown are principal and interest home loans available for a loan amount of $500K in Auckland. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products. Canstar may earn a fee for referrals.
Compare Cheapest Home Loan Rates
About the author of this page
This report was written by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.
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