Auckland, 14 Oct 2025
Finance Minister Nicola Willis has welcomed the Reserve Bank of New Zealand’s plan to relax home-loan restrictions, saying it will be easier for first-home buyers to enter the market.

What is being proposed

  • From 1 December 2025, the Reserve Bank is consulting banks on easing loan-to-value ratio (LVR) limits.
  • For owner-occupiers with less than 20 percent deposit, banks would be able to make up to 25 percent of new loans, up from the current 20 percent.
  • For residential property investors with less than 30 percent deposit, banks could make up to 10 percent of new loans, up from 5 percent.

Minister Willis said home ownership is part of the Kiwi dream, and the proposed changes should help more people get a foot on the property ladder. The Reserve Bank believes last year’s debt-to-income (DTI) limits have made the banking system more resilient, so LVRs can now be eased.

What this means in simple terms

For first-home buyers

  • More banks will be allowed to lend to buyers who have less than 20 percent deposit.
  • Competition between banks may improve approval chances for well-prepared buyers.
  • You will still need to meet DTI and income tests, and show the loan is affordable.

For investors

  • A small increase in the share of loans where investors have under 30 percent deposit.
  • Banks will still assess risk carefully under DTI and standard lending rules.

Quick definitions

  • LVR (Loan-to-Value Ratio)
    How much you borrow compared with the home’s value. Lower deposit means higher LVR.
  • DTI (Debt-to-Income)
    Your total debt compared to your annual income. A lower DTI makes approval easier.

Easy guide for the community in New Zealand

  1. Check your deposit and DTI early
    Work out your maximum budget and talk to your bank or a mortgage adviser.
  2. Get a pre-approval
    It shows sellers you are serious and helps you bid with confidence.
  3. Use first-home support
    Look at KiwiSaver first-home withdrawal and any grants you may qualify for.
  4. Plan for interest rate changes
    Fix a rate that suits your budget and keep a small emergency fund.
  5. Avoid over-stretching
    Even if banks can lend more, buy within a comfortable repayment range.

Key facts at a glance

  • Consultation start, now
  • Proposed change date, 1 December 2025
  • Owner-occupier low-deposit lending cap, 20 percent to 25 percent
  • Investor low-deposit lending cap, 5 percent to 10 percent
  • Reason, DTI rules add resilience, allowing LVR easing