Why 2026 is a 'Goldilocks year' for first-home buyers

"There's still a perception out there that you need a 20 percent deposit. That that's a must-have kind of line in the sand. That perception has been there since the LVR restrictions came in." Photo: RNZ 2026 is a "Goldilocks" year for first-home buyers, with lower interest rates, lots of houses to choose from and banks willing to lend to people with small deposits, market commentators say. Property data firm Cotality (formerly known as Corelogic) has released data showing first-home buyers have reached a new record market share, responsible for 28.4 percent of all real estate transactions in the December quarter of last year. Investors with mortgages were 24.6 percent. The number of deals being done by first-home buyers was rising too, which Cotality said was partly due to people using KiwiSaver for the deposit and also using banks' low-deposit lending allowance. The Reserve Bank changed its loan-to-value ratio (LVR) restriction settings in December to allow banks to lend up to 25 percent of new lending to owner-occupiers with a deposit of less than 20 percent. In November, $1.178 billion was lent to people with a deposit below that level and $871 million of that went to first-home buyers. Cotality said about 12 to 13 percent of new lending was being done to people with smaller deposits. Chief property economist Kelvin Davidson said some households were now finding that the cost of servicing a home loan was comparable to rent or even cheaper. "With property values off their highs, mortgage rates easing, and support from KiwiSaver and low deposit lending, this group is well placed to take advantage of opportunities. For many, the gap between renting and buying has narrowed, making home ownership more achievable," Davidson said. Glen McLeod, head of mortgage advisors Link Advisory, said a large proportion of the transactions his staff were working on involved first-home buyers. "Most of these buyers are purchasing with loan to value ratios above 80 percent, and KiwiSaver continues to be the backbone of their deposits, typically contributing around 10 percent to 15 percent. "The Kāinga Ora First Home Loan product remains a strong option. It allows eligible buyers to access interest rates that align with standard under 80 percent lending, which can make a meaningful difference to long term affordability. For clients who don't use the Kāinga Ora product, interest rates generally carry a margin of around 0.35 percent or more, depending on the LVR. "Even when clients don't qualify for the Kāinga Ora package, we're still seeing excellent outcomes by working across multiple lenders and tailoring solutions to each buyer's situation." Campbell Hastie, of Hastie Mortgages, said low deposit lending had become easier. "I think partly you can probably put it down to the fact that the Reserve Bank opened the valve on that pool of high LVR funding in December, so the banks have a bit more capacity. And I won't say they've become more lenient, but there's just more available. So there's more being approved." He said some people might not realise that they could qualify for a home loan. "There's still a perception out there that you need a 20 percent deposit. That that's a must-have kind of line in the sand. That perception has been there since the LVR restrictions came in." But he said people with a smaller deposit might need to be prepared to be investigated a bit more when they applied. "The banks still put a higher hurdle in front of you from a debt servicing perspective to get that approval. And that makes perfect sense because the smaller your deposit, the lesser wriggle room there is for the bank to lean on, if you like, if for some reason the loan goes bad or the house goes bad. So they've got to make sure that you've got the chops to cover that, and they do that by stress testing your ability to service that loan." But Hastie said 2026 was shaping up to be a Goldilocks moment for buyers. "Conditions are pretty good, the best they've been in some time. It's a function of good interest rates, lots of stock available to look at - least for now. The high LVR pool of funding … there's just more of it. And I think overall job security has probably improved from what it was maybe a year or even two years ago." Cotality said sales volumes in December were 19.7 percent higher than in 2024, bringing the total number of sales in the year to 90,300. The number of available listings is still high compared to history but about 18 percent below where it was a year earlier. Davidson said smaller investors were re-entering the market. "Mortgaged multiple property owners, including smaller and newer investors, continued to re engage cautiously with the market. Lower mortgage rates and reduced cashflow top ups on rental properties have helped investors targeting lower priced or existing dwellings. "However, the lurking influence of debt to income (DTI) ratio limits in 2026 is expected to be an important...

Why 2026 is a 'Goldilocks year' for first-home buyers

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Why 2026 is a 'Goldilocks year' for first-home buyers

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