NZ Mortgage & Property Market Update – October 2025

October was anything but quiet for Kiwi homeowners and buyers. After a sleepy winter, the market finally got a wake-up call – courtesy of a surprise interest-rate cut and a spring surge in property activity. In this update, we’ll unpack the month’s key changes in plain English, from government moves and bank-lending shifts to what’s happening with house prices. Let’s dive in!

Government & Policy Highlights

Big rate cut from the Reserve Bank: The Reserve Bank of New Zealand (RBNZ) delivered an unexpected early-October present by slashing the Official Cash Rate (OCR) by 0.50 %. The OCR now sits at 2.50 %, the lowest in over three years. Policymakers hinted they’re open to even more cuts if needed to keep inflation on target. For borrowers, this bold move is like a green light – lower interest costs are flowing through the banks and putting a bit more spring in everyone’s step.

Easier rules for low-deposit loans: In mid-October, the RBNZ also announced it will loosen mortgage loan-to-value ratio (LVR) restrictions from 1 December 2025. Banks will soon be able to approve a larger chunk of new loans for buyers with small deposits (now 25 % of owner-occupier lending can be to borrowers under 20 % deposit, up from 20 % currently). For investors, the high-LVR lending allowance will double (from 5 % to 10 % of new loans). The RBNZ credited last year’s introduction of debt-to-income limits for creating room to dial back the LVR rules. Bottom line: first-home buyers in particular may find it a tad easier to get a foot on the ladder with a smaller deposit.

Government boosts housing supply: Parliament passed a law allowing granny flats (up to 70 m²) to be built without a building consent (from early 2026). This cuts red tape and encourages more multi-generation or rental options – a win for families and housing supply alike.

Investor tax tweak fully in effect: As of 1 April 2025, landlords can again claim 100 % of their mortgage interest as an expense. This policy reversal aims to ease pressure on rents and entice investors back into the market by improving cash-flow and yields.

Lending, Rates & Banking

Interest rates near the cycle’s bottom: With the OCR at 2.5 %, mortgage rates have followed suit. One-year fixed rates hover around the mid-4 % range – the lowest in years. Economists agree we’re at or near the bottom of the rate cycle, so money is about as cheap as it’s going to get.

Banks competing for borrowers: Spring has banks vying for customers like it’s a Halloween lolly scramble – cash-back offers, discounted floating rates, and plenty of flexibility. Refinancers are breaking and refixing loans at today’s lower rates, often saving hundreds per month even after break fees.

LVR & DTI – the fine print: DTI rules remain steady, but December’s LVR easing means more low-deposit borrowers could finally get a “Yes.” First-home buyers with 10–15 % deposits are now being approved more often as banks balance risk and competition.

Borrower behaviour in October: Mortgage brokers saw a burst of activity – first-home enquiries spiked, refinancers locked in lower rates, and investors cautiously returned. Banks report applications and approvals up, helped by faster digital processes and spring momentum.

Property Market Data

House prices finding a floor: The national median price in September was $770 000 (+1.2 % MoM, -1.5 % YoY). Values appear to have stopped falling and are nudging up again in many regions. The REINZ Index rose 0.8 % month-on-month, hinting the market may have passed its low point.

Sales and listings on the rise: 6 346 homes sold in September (+3.1 % YoY) – the strongest September since 2020. Homes are selling faster too (43 days median vs 49 a year ago). After a quiet winter, buyers are back and supply is balancing.

Regional highlights: Auckland prices rose 0.8 % YoY (~$978 000). The West Coast and Southland hit new peaks, while Wellington remains -3 % YoY.

Bay of Plenty snapshot: Median $780 000 (-1.3 % YoY). Prices are sideways but stable; sales are up and confidence is returning across Tauranga, Papamoa and Mount Maunganui.

Bay of Plenty Insight

Spring in the Bay has brought a noticeable buzz back to the property scene. At open homes around Papamoa and Mount Maunganui, more couples and young families are turning up, encouraged by lower rates and steady prices. Even some investors have re-emerged at auctions looking for bargains. Compared to winter’s lull, Tauranga’s property pulse is definitely quickening as we head into summer.

One young couple I worked with in October had been outbid three times earlier this year; now they’ve finally secured a great starter home in Te Puke after adjusting their strategy – and they’re stoked!

What This Means for Borrowers

For first-home buyers: Interest rates are the lowest in years and house prices are steady. With LVR rules loosening, banks have more room to say “yes.” If you’ve got your deposit and pre-approval ready, late 2025 could be a smart window to buy.

For existing homeowners: Refinancing now can save 1–2 percentage points on rates – roughly $180 a month on a $500 000 loan. Review your structure, split terms, and negotiate while banks are keen.

For property investors: Full interest deductibility and lower rates improve cash flow and yields. With the market near its bottom, long-term buyers can cherry-pick good deals – but stick to fundamentals like yield, location, and sustainable debt.

Proof – Our Recent Mortgage Stats (last 90 days)

• Fast pre-approvals: 9 out of 10 Best Mortgages first-home buyers obtained pre-approval within 10 working days this quarter.
• Refinance savings: Clients cut their interest rates by an average 0.8 %, saving ≈ $180 monthly on a $500 000 loan.
• Investor activity: Enquiries up 25 % this spring vs winter – many locking in ~4.5 % rates to improve rental cash flow.

Talk to Best Mortgages

Whether you’re buying your first home, refinancing for a better deal, or planning your next investment move, now’s the perfect time to get expert advice. Our friendly team at Best Mortgages is based right here in Tauranga and helps Kiwis across the Bay of Plenty make sense of these market shifts. We speak plain English (and a bit of Te Reo and Kiwi slang when needed) and work for you – not the banks – to find the right solution.

Ready to explore your options? Contact us today for a free, no-obligation chat and we’ll walk you through the latest rates, rules, and opportunities tailored to your goals. Let’s turn those property dreams into reality this spring – we’re only a phone call or coffee catch-up away.

Best Mortgages — Operated by Ewald Biesenbach (FSP 320426) under The Best Limited (FSP 724451 – NZBN 9429043352067). Licensed under the Financial Services Legislation Act 2019.