First home buyers are taking a larger share of the property market, supported by improving affordability, easier access to finance and a wide choice of homes.
Mortgage lending data from the Reserve Bank of New Zealand shows first home buyer activity has been steadily increasing since early 2022, when rising interest rates and tighter lending rules slowed borrowing after the 2021 peak.
By December 2025, the number of new mortgages to first home buyers had reached a record level, sitting 7.5% above the previous peak in March 2021.
The Ministry of Housing & Urban Development (HUD) said the composition of the market has changed significantly.
“Back then, borrowing was driven by record-low interest rates and the temporary suspension of loan-to-value ratio (LVR) restrictions,” HUD said.
At the same time, the makeup of the market has changed. In January 2021, first home buyers made up just 25% of new mortgages, due to strong investor and mover activity. By January 2026, that had jumped to 35%.
Why first home buyers are so active
HUD identified three main reasons for the strong level of first home buyer activity.
- Deposit affordability has improved 11% since December 2023. Furthermore, high-LVR lending to first home buyers has increased from about 35% in 2023 to about 50% today. In other words, nearly half of today’s first home buyers are purchasing without the traditional 20% deposit.
- Lower interest rates have made a significant difference. As rates have fallen, it has become much easier for people to afford their mortgage repayments – a 70% improvement over the same period. It’s unusual to see deposit affordability and serviceability improving at the same time, according to HUD.
- The number of homes for sale has stayed high. Listings portals are reporting a 10-year high in available stock, giving buyers more choice and reducing the fear of missing out that often drives prices higher.
What this means for buyers
HUD said first home buyers with the required income to service a mortgage and some deposit saved are in a strong position, both in terms of accessing finance at favourable rates and finding a property that suits.
Current conditions offer a rare combination of improved borrowing power and greater choice. However, it remains important to understand lending requirements, deposit options and how to structure a loan effectively.
Planning to buy your first home? Get in touch to discuss your borrowing options and how to take advantage of current market conditions.
