Moody's and Cotality data show mortgage stress remains contained even as house prices soften
New Zealand mortgagee sales climbed in the second quarter of 2026, but remain a fraction of levels seen during the global financial crisis, RNZ reported, drawing on figures from credit rating agency Moody's and property data firm Cotality.
Mortgagee sales rise, but from a low base
Cotality figures show 111 mortgagee sales in Q2, up from 74 in the previous quarter and well above the record low of seven recorded in the first quarter of 2022. Even so, that figure remains far below the 763 and 758 sales recorded in mid-2009, at the height of the GFC.
A separate measure paints a similar picture: the most recent Centrix data puts residential mortgage arrears at 1.27%, the lowest level since 2023, with 20,700 accounts reported as past due.
Moody's vice president of ratings Frank Mirenzi (pictured left) said the rise in interest rates and slowdown in economic growth had weighed on the housing market, but this was unlikely to translate into widespread loan stress.
The non-performing home loan ratio has crept up from a cyclical low of 0.2% but sits at just 0.6% — still a low figure by historical standards. Household debt has also eased, falling from around 175% of income in 2021 to the mid-160% range.
Mirenzi pushed back on a common assumption.
"That's not what drives people's ability to repay their mortgage, what really drives their ability is having the income," he said, referring to the misconception that falling house prices lead directly to defaults. "The reason why things have been fairly stable is that even though unemployment has risen a bit, people's income have remained relatively stable."
Tighter lending standards are doing their job
Mirenzi pointed to lending safeguards introduced after the GFC as a key reason for the market's resilience, particularly debt-to-income limits.
"Those guardrails are really useful because what gets people into trouble is when they over-leverage, they borrow too much money and they have a high level of debt relative to income," he said.
Riskier lending has stayed contained at around 1% to 1.5% of new bank lending in recent years — well below regulatory limits.
Cotality chief economist Kelvin Davidson (pictured right) said internal bank serviceability testing had also filtered out risky loans early, while banks have shown greater willingness to work with struggling borrowers rather than pursue mortgagee sales.
"Arrears and then potentially mortgagee sales don't benefit anyone, not the bank or the borrower, so we've seen a willingness to go interest-only or extend the term or even stop repayments for a period of time," Davidson said.
What it means for advisers
Squirrel chief executive David Cunningham said banks have little appetite to force sales, preferring to renegotiate terms with borrowers wherever possible. For advisers, the data reinforces that current mortgage stress remains well contained, even as rates rise and values soften — a useful point of reassurance when discussing risk with anxious clients.
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