Starting 1 December 2025, the Reserve Bank of New Zealand is relaxing the rules around mortgage lending to make it easier for people to borrow money for homes.
The Reserve Bank introduced new debt-to-income rules last year that help protect borrowers from taking on too much debt.
Because of these safeguards, they’ve decided they can loosen the amount of higher loan-to-value* (LVR) ratios that banks are able to lend to.
If you’re buying your own home with less than a 20 percent deposit, banks will now be able to lend a total of 25 percent (currently 20 percent) of their new lending.
If you’re an investor buying rental properties, the share of new lending that can be made to people with equity or deposit of less than 30 percent will rise to 10 percent (currently 5 percent).
By giving the banks more flexibility to lend it should help more people, especially first-time home buyers, get access to credit more easily. The Reserve Bank thinks now is a good time to make this move because house prices look healthy, mortgage lending growth is steady, and risky lending is low.
What’s not changing
The Reserve Bank decided to keep their debt-to-income rules exactly as they are for now. These rules are working well to keep risky lending under control.
The Reserve Bank will talk with banks to sort out the details. Starting next year, a new Financial Policy Committee will take over reviewing these rules at least once a year to make sure they’re still appropriate.
* What is the LVR and why does it matter?
LVR stands for Loan-to-Value Ratio. It is the amount of a loan that a lender provides compared to the value of the property. So how much your deposit is, affects the LVR.
For example:
Borrowers with higher LVRs are considered to be more risk for the lender.
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