First-home buyer lending holds steady while investors pull back
New Zealand banks approved $7.188 billion of new residential mortgages in August. That's 4.9% less than a year earlier and 8.5% down on July, according to the latest Reserve Bank of New Zealand (RBNZ) figures on new mortgage lending.
Behind the headline number, the split between borrower groups is uneven. Investors are pulling back, while first-home buyers are holding their ground.
Investors retreat as first-home buyers hold steady
Lending to property investors fell to $1.398 billion in August, from $1.565 billion a year earlier, a drop of about 11%. Other owner-occupiers borrowed $4.231 billion, down around 4%.
First-home buyers bucked the trend. They took out $1.475 billion in new loans, almost unchanged from $1.47 billion in August 2025. High loan-to-value ratio (LVR) lending, where borrowers have deposits below 20%, totalled $1.2 billion across all groups. Of that, $815 million went to first-home buyers.
For mortgage advisers, the figures suggest first-home buyers remain an active part of the market, even as investors grow more cautious ahead of the election.
What's driving the decline
Once refinancing is stripped out, the annual fall is smaller. Refinancing shows up as fresh business for the bank that wins the customer, though total mortgage debt is unchanged.
Excluding switching, approvals came to $5.381 billion in August. That's down 3.7% year on year, following an 8% annual fall in July, according to interest.co.nz analysis of the RBNZ's data on new residential mortgage lending by purpose.
Both top-ups of existing loans and lending for property purchases were down 5.8% on the same month last year. Purchase lending had fallen 12.5% annually in July.
The fall in purchase lending mirrors weaker market activity. The Real Estate Institute of New Zealand (REINZ) recorded 5,430 residential sales in August, down 13% on a year earlier, with homes taking a median 51 days to sell.
A cooler season ahead
interest.co.nz said that, with a soft property outlook and households wary of taking on more debt, "the banks might be facing a fairly cool summer on the residential lending front."
Official forecasts point the same way. The Treasury's Pre-election Economic and Fiscal Update downgraded its house price outlook and noted markets now price the official cash rate (OCR) at around 3.9% by October 2027, up from 3.5% when its forecasts were set.
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