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 would 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 (19/07/23), the same rate is 7.18%.
→ Related article: Lowest Mortgage Rates in NZ
Due to rising interest rates, since 2021’s house-price high, the market has cooled considerably. According to REINZ, in the year to June 2023, the average median house price fell 8.2%.
Reflecting this drop, the latest Reserve Bank figures reveal mortgage lending was 14% lower in May 2023, compared to a year earlier, and down a whopping 34% on May 2021’s figures.
But while total lending is down double digits, the number of new mortgages issued has only fallen 2.6% over the same period, from 16,693 new mortgages in May 2022 to 16,258 in May this year. Although, compared to May 2021’s figures, the number of new borrowers is down 40%, from 27,105.
As a result, the average new home loan in May fell to $360,376, a 12% drop compared to lending in May 2022, when the average mortgage was $408,435.
However, this number is still 9.5% higher than the average mortgage ($329,127) back in May 2021, when $8921 million was borrowed.
But it’s interesting to see that while the number of investors and owner-occupiers taking out new mortgages is down, the number of first home buyers (FHBs) entering the market over the past year is up, see below.
Total Home Loan Borrowing
| Total lending ($million) | May 2021 | May 2022 | May 2023 |
|---|---|---|---|
| All borrower types | $8921 | $6818 | $5859 (-14%) |
| First home buyers | $1757 | $1314 | $1422 (8%) |
| Other owner-occupiers | $5527 | $4238 | $3362 (-20%) |
| Investors | $1540 | $1192 | $990 (-17%) |
| Business purposes | $98 | $74 | $85 (15%) |
| Higher than 80% LVR lending ($million) | |||
| All borrower types | $833 | $584 | $618 (6%) |
| First home buyers | $663 | $442 | $483 (9%) |
| Other owner-occupiers | $164 | $129 | $127 (-2%) |
| Investors | $4 | $13 | $7 (-46%) |
| Business purposes | $1 | $0 | $0 |
| Less than or equal to 80% LVR lending ($million) | |||
| All borrower types | $8088 | $6234 | $5241 (-16%) |
| First home buyers | $1094 | $872 | $939 (8%) |
| Other owner-occupiers | $5362 | $4109 | $3234 (-21%) |
| Investors | $1536 | $1179 | $983 (-17%) |
| Business purposes | $96 | $74 | $85 (15%) |
| Lending to investors ($million) | |||
| Total lending | $1540 | $1192 | $990 (-17%) |
| Higher than 70% LVR lending | $160 | $170 | $175 (3%) |
| Less than or equal to 70% LVR lending | $1379 | $1023 | $815 (-20%) |
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
And while lending to FHBs is up so, too, is the number of FHBs in the market, up 15% on a year ago, while other borrower types are down.
| Total No. Borrowers | May 2021 | May 2022 | May 2023 |
|---|---|---|---|
| All borrower types | 27,105 | 16,693 | 16,258 (-3%) |
| First home buyers | 3205 | 2219 | 2558 (15%) |
| Other owner-occupiers | 20,296 | 12,048 | 11,504 (-5%) |
| Investors | 3268 | 2194 | 1931 (-12%) |
| Business purposes | 336 | 232 | 265 (14%) |
| Higher than 80% LVR lending | |||
| All borrower types | 1469 | 852 | 995 (17%) |
| First home buyers | 1102 | 645 | 781 (21%) |
| Other owner-occupiers | 349 | 192 | 202 (5%) |
| Investors | 9 | 15 | 11 (-27%) |
| Business purposes | 9 | 0 | 1 |
| Less than or equal to 80% LVR lending | |||
| All borrower types | 25,636 | 15,841 | 15,263 (-4%) |
| First home buyers | 2103 | 1574 | 1777 (13%) |
| Other owner-occupiers | 19,947 | 11,856 | 11,302 (-5%) |
| Investors | 3259 | 2179 | 1920 (-12%) |
| Business purposes | 327 | 232 | 264 (14%) |
| Lending to investors | |||
| Total lending | 3268 | 2194 | 1931 (-12%) |
| Higher than 70% LVR lending | 274 | 253 | 261 (3%) |
| Less than or equal to 70% LVR lending | 2994 | 1941 | 1670 (-14%) |
Average Home Loan Borrowing
Last year, in May, the average mortgage across all borrower types was $408,435. That figure has now dropped to $360,376, down 12%.
| Average Mortgage | May 2021 | May 2022 | May 2023 |
|---|---|---|---|
| All borrower types | $329,127 | $408,435 | $360,376 (-12%) |
| First home buyers | $548,206 | $592,159 | $555,903 (-6%) |
| Other owner-occupiers | $272,320 | $351,760 | $292,246 (-17%) |
| Investors | $471,236 | $543,300 | $512,688 (-6%) |
| Business Purposes | $291,667 | $318,966 | $320,755 (0.6%) |
| Higher than 80% LVR lending ($million) | |||
| All borrower types | $567,052 | $685,446 | $621,106 (-9%) |
| First home buyers | $601,633 | $685,271 | $618,438 (-10%) |
| Other owner-occupiers | $469,914 | $671,875 | $628,713 (-6%) |
| Investors | $444,444 | $866,667 | $636,363 (-27%) |
| Business Purposes | $111,111 | 0 | 0 |
| Less than or equal to 80% LVR lending ($million) | |||
| All borrower types | $315,494 | $393,536 | $343,379(-13%) |
| First home buyers | $520,209 | $554,003 | $528,419 (-5%) |
| Other owner-occupiers | $268,812 | $346,576 | $286,144 (-17%) |
| Investors | $471,310 | $541,074 | $511,979 (-5%) |
| Business Purposes | $293,578 | $318,966 | $321,970 (1%) |
| Lending to investors ($million) | |||
| Total lending | $471,236 | $543,300 | $512,688 (-6%) |
| Higher than 70% LVR lending | $583,942 | $671,937 | $670,498 (-0.2%) |
| Less than or equal to 70% LVR lending | $460,588 | $527,048 | $488,024 (-7%) |
Average Home Loan Repayments
However, while average mortgages have shrunk over the past year, interest rates have increased dramatically. At the end of May 2022, the average 1-year fixed rate on Canstar’s database was 4.56%, this year it was 6.90%.
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 are down 12%, the repayments on these smaller mortgages are up over 10%.
The following calculations are for a loan repayment on principal and interest, paid monthly over 25 years. For the investor figures, we used the Canstar database’s average one-year investor rates of 4.71% (May 2022) and 7.35% (May 2023).
Estimated monthly repayments on an average new home loan
| Lender | Average mortgage/repayments May 2022 @ 4.56% |
Average mortgage/repayments May 2023 @ 6.90% |
|---|---|---|
| All borrower types | $408,435 – $2284 p/m | $360,376 – $2524 p/m |
| First home buyers | $592,159 – $3312 p/m | $555,903 – $3894 p/m |
| Other owner-occupiers | $351,760 – $1967 p/m | $292,246 – $2047 p/m |
| Low-equity average mortgage | $543,300 – $3038 p/m | $512,688 – $3591 p/m |
| Investors (4.71%/7.35%) | $318,966 – $1811/m | $320,755 – $2339 p/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 6.40% and top out at 8.79%, which is just below the highest floating rate on our table: 8.84%. 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.
Enjoy reading this article?
You can like us on Facebook and get social, or sign up to receive more news like this straight to your inbox.
By subscribing you agree to the Canstar Privacy Policy
Share this article