PHOTO: FILE
Despite recent drops in home loan interest rates in New Zealand, are Kiwis really getting the best deals compared to the rest of the world? A fresh comparison reveals some surprising differences in how countries handle mortgage lending — and it’s more complex than you might think.
Rates on the Move in NZ
New Zealand banks have begun trimming their home loan rates, with some dipping below the symbolic 5% mark. ANZ is now offering a two-year fixed mortgage rate of 4.99%, responding to the Reserve Bank’s 3.5% official cash rate and softening wholesale lending costs.
But how does that compare globally? Let’s take a look:
Global Home Loan Rate Comparison Table – April 2025
 Country |
 Fixed Term |
 Interest Rate (%) |
|---|---|---|
 New Zealand |
2-Year Fixed | 4.99 |
 Australia |
2-Year Fixed | 5.74 |
 United Kingdom |
2-Year Fixed (FHB) | 4.25 |
 United States |
30-Year Fixed | 6.70 |
| United States |
15-Year Fixed | 5.96 |
 Fiji |
1-Year Fixed | 3.95 |
 Canada |
3-Year Fixed | 4.29 |
 Sweden |
2-Year Fixed | 3.49 |
 Japan |
10-Year Fixed | 1.89 |
What’s Driving the Differences?
“Every market is different,” says Kelly Eckhold, Westpac’s chief economist. Fixed vs. floating rates, capital requirements, and banking culture all play a role.
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US homeowners love long-term stability — 30-year fixed loans are the norm.
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Australia leans heavily on floating rates, with banks offering high returns on savings.
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UK loans tend to be tied directly to the Bank of England’s base rate.
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New Zealand is unique: floating rates have huge margins, so 90%+ of borrowers go fixed.
Squirrel CEO David Cunningham adds that bank capital rules drive up NZ’s rates. Kiwi banks must hold more capital than most other countries, increasing the cost of lending.
Infographic: Mortgage Trends by Region
Bottom Line
New Zealand’s home loan rates are dropping — but structural factors like stricter bank capital rules and a preference for fixed-rate lending mean Kiwis still pay more than some global peers. It’s not just about the number — it’s about how the game is played.
SOURCE: RNZ