Falling rates, strong banks drive first-home buyer surge
A quarter of all new home loans went to first-home buyers in the first half of 2025, according to the New Zealand Banking Association’s (NZBA) latest Retail Banking Insights report.
Of the 60,249 new loans opened between January and June, 25% were for first-home buyers – consistent with the previous six months.
“It’s great to see first home buyers taking advantage of the current property market and getting into their first home,” said NZBA chief executive Roger Beaumont (pictured), in a media release. “A quarter of new home loans were for first home buyers, and that was similar for the previous six months.”
The average first-home buyer loan rose 3% to $507,690, while the average home loan across all borrowers increased 2% to $329,656.
At the end of June, there were 1.4 million home loans across 1.2 million customers, reflecting a stable lending environment despite economic headwinds.
Supporting this, the latest mortgages.co.nz & Tony Alexander Mortgage Advisers Survey shows first-home buyers firmly back in the driver’s seat. A net 33% of advisers reported more first-home buyer enquiries in October – the highest level since March.
“Many first-home buyers are taking advantage of the current market which involves things such as increased bank willingness to lend, low interest rates, little competition from other buyers, and a good number of listings,” Alexander said.
Borrowers managing repayments well
The NZBA report found 40% of home loan customers are making more than their minimum repayments, while only 1.5% are behind on payments.
Meanwhile, 12,555 loans switched to interest-only repayments, down 28% on the previous six months – suggesting fewer borrowers are under repayment pressure.
“Despite the challenging economic conditions, we’re seeing most customers continuing to manage their money well,” Beaumont said.
Lending appetite is also improving, with a net 33% of advisers in Alexander’s survey saying banks are more willing to advance funds — the strongest level since March.
“Credit is available from lenders – telling us that the missing element is mainly a lack of finance demand overall,” Alexander said.
Digital banking and repayment discipline strengthen
The data also points to continued growth in digital banking, with 5.9 million customers actively using mobile or internet platforms – up 3.7% from the previous period.
Across 10.1 million unique customers, there were two billion transactions in the first half of the year. In contrast, cash transactions in branches fell 12.2%, underscoring the shift away from in-person banking.
Credit card use remains disciplined, with 67.1% of customers paying off balances in full each month to avoid interest.
Deposits dip as interest rates ease
The total value of term deposits dropped 2.2% to $188 billion, while the average term deposit rate fell from 5.6% to 4.1%, reflecting lower OCR settings and falling mortgage rates.
ASB’s Home Loan Rate Report supports this, noting fixed rates between one and two years have fallen by up to 3% from their 2022-23 peaks. Most borrowers are now opting for one-year fixed terms, prioritising flexibility amid expectations of further cuts.
At the same time, hardship cases declined 9.1% and complaints fell 6.3%, showing improved financial stability across households.
Outlook: Confident buyers and flexible lenders
While lending growth remains steady, lower rates, strong bank appetite, and rising first-home buyer demand point to a more confident but cautious property market heading into 2026.
Beaumont said the results highlight borrowers’ financial resilience: “Most customers continue to manage their money well.”
Alexander added that first-home buyers remain the most dominant force, as borrowers focus on flexibility and affordability while rates continue to ease.
The full NZBA Retail Banking Insights for January-June 2025 are available here.
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