More than half the $1.68 billion approved for first home buyer mortgages in May was low equity lending — and the share is climbing again
New Reserve Bank of New Zealand (RBNZ) data shows more than half of May 2026 mortgage approvals to first home buyers were low equity loans. The share has rebounded after easing in the March quarter.
Low equity first home buyer loans accounted for $882 million of the $1.68 billion approved to first home buyers in May, or 52.5% of the total, according to the RBNZ's C31 mortgage lending series. The proportion dipped to 45.3% in March 2026 after reaching a record 51.8% in January 2026.
First home buyer low equity loans rebound after March dip
A low equity mortgage is one where the borrower holds less than a 20% deposit, placing the loan above an 80% loan-to-value ratio (LVR). Under RBNZ rules, no more than 25% of a bank's new owner-occupier lending can carry an LVR above 80%.
Overall first home buyer mortgage approvals were broadly flat in May. Lenders approved 2,875 mortgages to first home buyers. This is 17 more than the 2,858 approved in April and 20 fewer than the 2,895 approved in May 2025, according to analysis published by interest.co.nz. Approval numbers remain 14.1% below the March 2021 peak of 3,347.
The average mortgage approved to a first home buyer in May was $584,348. That figure has held within a narrow range of $578,000 to $599,000 since October 2025.
Interest.co.nz estimates the average price paid by first home buyers in May was $688,000, within a range of $682,000 to $703,000 since the start of 2026.
Low equity lending accounts for majority of first home buyer borrowing
Banks apply different conditions to borrowers with deposits below 20%. Most lenders charge a low equity margin on top of the standard interest rate, though the size of that margin varies by lender and LVR position.
The Kāinga Ora First Home Loan allows eligible borrowers to purchase with a deposit as low as 5% and is exempt from RBNZ LVR speed limits. Income thresholds are $150,000 combined for couples and $95,000 for individuals. A May 2026 survey of mortgage advisers found that lending criteria easing in New Zealand was focused more on first home buyers than other borrower types.
Earlier data from the same RBNZ series shows first home buyers have consistently absorbed the large majority of banks' LVR allowance for low-deposit lending to owner-occupiers.
Reserve Bank figures cited in a May 2026 Cotality–Westpac report indicated the average LVR for first home buyer loans had risen to approximately 81% over the past year, up from below 77% in 2024.
The May 2026 RBNZ data shows first home buyer low equity loans remain the dominant form of lending to this borrower group. The share of low equity approvals are now near the January 2026 record.
