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New Zealand First-Home Buyers Stretching Finances Despite Challenges

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  Published in House and Home on Friday, February 13th 2026 at 18:47 GMT by Stuff.co.nz
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Auckland, New Zealand - February 13th, 2026 - The dream of homeownership remains alive for many New Zealanders, but the path to achieving it is markedly different today than it was just a few years ago. Recent mortgage data paints a nuanced picture of the first-home buyer market, revealing a cohort increasingly willing to stretch financially to enter the property ladder despite rising interest rates and tightened lending criteria.

Data released by Stats NZ indicates that 32,524 first-time buyers secured mortgages in the year ending September 2023, a decline from the 54,379 recorded in the year to September 2021. However, the total value of these mortgages - $9.7 billion - remains surprisingly robust, only slightly below the peak of $10.2 billion observed in 2021. This disparity suggests that while fewer individuals are entering the market, those who are are taking on larger financial commitments.

Kayne Johnson, Chief Economist at CoreLogic, explains that this trend reflects a significant shift in buyer behaviour. "We're seeing first-home buyers stretching a bit further," he states. "Deposit sizes are smaller, debt-to-income ratios are higher, but they're still getting there." This resilience highlights the enduring cultural importance of homeownership in New Zealand, as well as a potential lack of viable alternatives for many.

Financial Snapshot: What First-Home Buyers Are Facing

The current financial landscape for first-home buyers can be summarised as follows:

• Average Mortgage Size: Approximately $430,000. This figure is indicative of the type of properties first-home buyers are targeting - often smaller homes or those in more affordable regions.
• Average Deposit: Around 19% of the property's value, a decrease from 22% in 2021. This reduction in deposit size signals increased financial risk for new homeowners and a greater reliance on mortgage financing.
• Average Interest Rate: Currently hovering around 6.3%. While rates have fluctuated, they remain significantly higher than the historically low levels seen in recent years, adding substantial pressure to monthly mortgage payments.
• Average Debt-to-Income Ratio: 6.8, up from 6.2 in 2021. This indicates that borrowers are taking on more debt relative to their income, increasing their vulnerability to financial hardship if economic conditions worsen.

Shifting Priorities: Affordability Takes Centre Stage

The driving force behind these trends is a clear prioritisation of affordability. With higher mortgage rates and stricter lending standards imposed by banks - partially in response to Reserve Bank regulations - buyers are carefully evaluating all associated costs. Johnson notes, "Buyers are becoming more aware of all the costs associated with owning a home. Insurance, rates, maintenance - these are all things that first-home buyers are factoring into their budgets."

The broader economic context also plays a crucial role. New Zealand, like many nations, has experienced a significant increase in the cost of living. This erosion of disposable income has left prospective homeowners with less capital to allocate towards a deposit or to comfortably cover ongoing homeownership expenses.

Looking Ahead: A Volatile Future

The future trajectory of the first-home buyer market remains uncertain. Several factors could influence the direction of the market in the coming years. Continued high interest rates and a sluggish economy could discourage potential buyers, leading to a further decline in mortgage approvals. Conversely, a significant drop in house prices could make homeownership more accessible, potentially stimulating demand.

However, demographic trends suggest continued pressure on housing supply, particularly in major urban centres like Auckland and Wellington. Limited land availability, coupled with population growth, will likely keep house prices elevated, even if growth moderates. The government's ongoing efforts to increase housing density and streamline building consent processes will be critical in addressing this supply shortage.

Johnson concludes, "The market is likely to remain volatile for the foreseeable future." Navigating this volatility will require both buyers and policymakers to remain adaptable and informed. First-home buyers will need to carefully assess their financial situation and explore all available support options, while the government will need to strike a balance between maintaining financial stability and ensuring access to affordable housing.

Disclaimer: This article contains general information only and does not constitute financial advice. Always seek professional advice before making financial decisions.