PHOTO: The Reserve Bank is shaking up the housing market. FILE
From December 1, loan-to-value ratio (LVR) rules will loosen, making it easier for Kiwis with smaller deposits to get a mortgage. Here’s what you need to know this week.
1. LVR Rules Loosen – What This Means
From December 1:
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25% of lending to owner-occupiers can be done with less than a 20% deposit (up from 20%).
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10% of lending to investors can be done with less than a 30% deposit (up from 5%).
First-home buyers may not see a huge difference, as low-deposit lending already accounts for 12–13% of owner-occupier mortgages. Investors may benefit more, but other restrictions like debt-to-income caps and banks’ serviceability checks still limit activity.
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2. Sluggish Migration and Falling Rents
Rental markets are softening. MBIE’s bond data shows rents are falling in many main centres due to affordability issues and more listings.
Net migration is low, too. Stats NZ reports just 10,600 arrivals in the year to August versus a long-term average of 31,500. Lower population growth means weaker demand for rental properties.
3. Construction Costs Remain Stable
Cordell’s Construction Cost Index shows a small increase: 0.4% over three months to September and 2% year-on-year—well below long-term averages.
With interest rates lower and supportive lending rules, new-build demand may rise in 2026. Construction costs could tick up slightly, but a repeat of the post-COVID spike is unlikely.
4. Inflation Could Hit 3%
Stats NZ releases Q3 inflation data on Monday. The Reserve Bank expects headline CPI may reach 3%, the top of its target range. This temporary rise shouldn’t change the broader trend, as spare capacity in the economy will help future CPI readings ease.
5. Bank Switching to Watch
Mortgage refinancing and bank switching (‘refi’) have been a hot trend. September’s Reserve Bank data will show if borrowers continued chasing cashback offers and switching lenders.
Kelvin Davidson is chief economist at property insights firm Cotality.