Mortgage Rates:

Households are set to make some big calls about their mortgages during 2025 as they weigh up their options with falling interest rates. Property research company CoreLogic says 4 out of 5 borrowers started the new year with either a floating mortgage rate or a fixed term of less than 12 months. For new loans only 10% were fixed for longer than 12 months compared to a year ago it was 51%.

The percentage of new loans on floating rates, which tend to be higher than fixed rates, has risen from 17% 12 months ago to 28%. This was evident in existing loans too with the share of debt on floating rates up significantly to 14% the highest level since 2020.

With the reserve bank continuing to cut the official cash rate (OCR) this year borrowers have been keen to take advantage of falling mortgage interest rates. For example, Westpac has recently offered a 4.99% rate for three years whilst ASB has reduced its one-year rate by 5 basis points to 5.49%.

Despite the risks that come with floating rates there has been a rise in the uptake of floating interest rates with borrowers happy to take the short-term pain of higher servicing costs for a long- term gain.

The Reserve Bank of New Zealand reviews the OCR seven times a year with the next Monetary Policy Statement and OCR scheduled for the 9 April 2025.

First Home Grant Scheme:

The Government scrapped this scheme in May 2024. The scheme gave eligible house buyers $5,000 towards an existing home or $10,000 for a new home.

However, First Home Loans are another government scheme to help first home buyers get into their first home. The loans are underwritten by Kainga Ora which means the banks are able to be more flexible about lending. To qualify you will need to be a first home buyer or a previous homeowner in a similar situation and have a 5% deposit. This deposit requirement is a huge bonus as most banks require a 20% deposit meaning would be buyers need to find a $158,000 deposit for a $790,000 home (the current national median price). A 5% deposit on the other hand, is much more manageable at $39,500.

Additionally, if you have been in the KiwiSaver Scheme for three years or more you can withdraw most of both your, your employer’s contributions, government contributions and any interest you have earnt. However, you have to leave $1000 in your KiwiSaver account. If you’re a “second-chance buyer” and previously owned a home, you might still qualify, as long as you haven’t used KiwiSaver to buy a property in the past because you cannot double dip.

"BORROWERS HAPPY TO
TAKE SHORT-TERM PAIN...
FOR A LONG TERM GAIN"

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