Residential housing loan rates in New Zealand - Data and Analysis (1965-2033)

IBISWorld forecasts that residential housing loan rates will weaken by 3.03 percentage points in 2025-26, averaging 5.08%. To facilitate greater spending from households and support the economy during the pandemic, the RBNZ temporarily removed loan-to-value ratio (LVR) restrictions in May 2020. This measure was reinstated in March the following year and further tightened in May and November 2021 as the housing market and new mortgage lending rebounded. From October 2021, the RBNZ began gradually raising the Official Cash Rate (OCR) in response to rising global and domestic inflation. The Bank continued to raise the OCR over the following three years, resulting in higher residential housing loan rates during that period. Although banks can set mortgage rates independently of the OCR, changes in the OCR are a significant influence on residential housing loans, with the latter following the former in rising and falling.The implementation of a new macro-prudential tool, the Debt-to-Income (DTI) ratio, on July 1 2024, fundamentally changed the nation's lending environment by capping borrowing capacity to six times the gross income for most owner-operators. In August 2024, the RBNZ decided to cut the OCR, the first time since March 2020. This shift in policy marked the start of an aggressive easing cycle that persisted throughout the 2025 calendar year, dropping it to 2.25% by November 2025. Lending was further streamlined over this period through the rollback of prescriptive affordability regulations as prescribed by the Credit Contracts and Consumer Finance Act 2023.In recent years, LVR restrictions have been gradually loosened, resulting in further reduced residential housing loan rates compared to those in 2022-23 and 2023-24. Most notably, effective December 1, 2025, the RBNZ raised the 'speed limit' for high-LVR owner-occupiers to 25%, allowing more low-deposit borrowers to enter the market. IBISWorld estimates the residential housing loan rates will have risen at an annualised 0.1 percentage points over the five years through the end of 2025-26.