Home Loan Interest Rates – May 2025

As of May 2025, home loan interest rates in New Zealand are on a downward trend, driven by recent cuts to the Official Cash Rate (OCR) by the Reserve Bank of New Zealand (RBNZ). The OCR currently stands at 3.5%, with expectations of further reductions to stimulate economic growth amid subdued domestic demand and global trade pressures.

 Comparative Mortgage Rates from Leading Banks

Note: Rates are indicative and may vary based on loan terms, equity, and borrower profile.

 Rate Outlook for 2025

Economists anticipate further OCR reductions, potentially reaching 2.5% by the end of 2025, to support the economy and job market. This downward OCR trend is expected to lead to corresponding decreases in mortgage interest rates.

For example, ANZ projects that its 1-year fixed rate could fall to 5.0% by September 2025. Similarly, Opes Partners forecasts the OCR at 3% by December 2025, with a 1-year fixed mortgage rate of approximately 4.9%.

 Considerations for Borrowers

• Floating vs. Fixed Rates: Floating rates offer flexibility for those expecting rate cuts, while fixed rates provide repayment certainty.

• Loan-to-Value Ratio (LVR): Borrowers with higher LVRs may incur additional margins. For example, Westpac applies up to a 1.75% margin for loans exceeding 95% LVR.

• Special Offers: Some banks offer discounted rates for first-home buyers or specific conditions. Unity, for instance, offers a First Home Buyer 1-year fixed rate at 4.69%.

 References

1. Reuters – New Zealand’s softer jobs growth reinforces bets for more rate cuts: https://www.reuters.com/world/asia-pacific/new-zealands-softer-jobs-growth-wage-inflation-reinforce-bets-more-rate-cuts-2025-05-07/?utm_source=chatgpt.com

2. Canstar NZ – When will interest rates go down?: https://www.canstar.co.nz/home-loans/when-will-interest-rates-go-down/?utm_source=chatgpt.com

3. Opes Partners – Interest Rate Predictions 2025: https://www.opespartners.co.nz/mortgage/interest-rates/interest-rate-predictions?utm_source=chatgpt.com

4. Good Returns – Mortgage Rate Comparison NZ: https://www.goodreturns.co.nz/mortgage-rates.html?utm_source=chatgpt.com

5. Westpac NZ – Home Loan Interest Rates: https://www.westpac.co.nz/home-loans-mortgages/interest-rates/?utm_source=chatgpt.com

6. ANZ NZ: https://www.anz.co.nz/

7. ASB: https://www.asb.co.nz/

8. BNZ: https://www.bnz.co.nz/

9. Kiwibank: https://www.kiwibank.co.nz/

10. SBS Bank: https://www.sbsbank.co.nz/

11. TSB Bank: https://www.tsb.co.nz/

12. Unity: https://www.unitymoney.co.nz/

13. Heartland Bank: https://www.heartland.co.nz/

14. Co-operative Bank: https://www.co-operativebank.co.nz/