Most Kiwi borrowers ahead on mortgages, saving thousands

A growing share of New Zealand home loan borrowers are ahead on their repayments, giving them flexibility and potential savings worth hundreds of thousands of dollars.

RNZ surveyed the major banks and found significant numbers of customers had already paid down more than the minimum required by this stage of their mortgage term. Across New Zealand, there are around one million home loans.

At Westpac, about 65% of customers were at least three months ahead, with an average buffer of $12,000. 

“As of 31 March, 0.54 percent of our home loan book was in 90-plus day arrears, a small rise on the previous year,” the bank said.

ANZ also reported strong resilience. More than 40% of its home loan customers were at least six months ahead, while nearly half (48%) had a savings buffer of $5,000 or more.

“Over the past three months just under a quarter of all home loan customers refixing at a lower rate have either kept their repayment amounts the same or increased them which means they will now be paying off their home loans faster than before,” ANZ said.

Banks highlight customer strategies

Kiwibank said around 40% of its fixed-rate borrowers were ahead of schedule.

“Our approach is to give customers the flexibility and support to get ahead. For example, when we lower variable interest rates, we keep repayments the same, helping customers pay off their variable loans faster,” the bank said.

BNZ reported 55% of its customers are ahead by an average of two years.

The trend comes as New Zealand’s economy weakened more than expected, contracting 0.9% in the June quarter. Economists, including Westpac and ASB, now expect larger OCR cuts at the Reserve Bank’s October meeting – a move that could push mortgage rates even lower and encourage more borrowers to maintain higher repayments.

Adviser tips for maximising savings

Loan Market mortgage adviser Karen Tatterson (pictured) said she strongly recommends borrowers maintain the same repayment level when refixing.

Tatterson said some clients were seeing “massive” reductions in loan terms and overall interest costs.

“It also means they had the ability to cope with any increases in interest rates in future,” she said.

Mortgage calculators show the potential scale of savings. Sorted estimates that a borrower with a $500,000 loan at 6.14% who refixed at 4.75% and kept repayments the same could save nearly $300,000 in interest and shave seven years off their loan term.

How much could your clients save?

Sorted’s analysis shows the benefits of keeping repayments steady when rates drop:

• $500,000 loan, 30 years, refixing from 7% to 4.7%: Keep repayments at $768/week, repay 11 years early and save over $400,000 in interest.
• $500,000 loan, 30 years, refixing from 5.5% to 4.7%: Keep repayments at $655/week, repay five years early and save about $180,000 in interest.

For mortgage advisers, the message is clear: encouraging clients to hold repayments steady when rates fall can be a powerful strategy to reduce debt faster, build resilience, and generate long-term savings.

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