Rate Cut and Loan Changes Set to Boost New Zealand Property Market

The recent 0.5% OCR cut and updated LVR rules are expected to improve buyer access and confidence, sparking activity in the New Zealand property market.

OCR Reduction Sparks Optimism for Property Buyers

The Reserve Bank of New Zealand’s recent 0.5% cut to the Official Cash Rate (OCR) has created renewed optimism for the property market. The OCR now sits at 2.5%, down from 5.5% in July 2024, making borrowing cheaper and more accessible for prospective buyers.

This monetary stimulus is expected not only to support the property sector but also to help the wider Kiwi economy regain momentum after a period of slower growth.

Current Market Conditions

The latest OneRoof/Valocity survey shows that average property values dipped 0.8% over the past three months to $957,000, essentially returning to levels seen 12 months ago. While this stagnation can frustrate property owners and investors, it may present an opportunity for buyers waiting on a market correction.

Experts suggest that standing on the sidelines for too long could be costly, as improving credit conditions and lower interest rates may push prices higher in the coming months.

LVR Changes to Improve Access to Credit

In addition to lower interest rates, the RBNZ has signalled changes to Loan-to-Value Ratio (LVR) rules, effective 1 December 2025, designed to give banks more flexibility and buyers better access to finance.

Key LVR changes include:

• Owner-occupiers: The proportion of new lending allowed with an LVR above 80% will increase to 25%, up from 20%.
• Investors: The proportion of new lending allowed with an LVR above 70% will increase to 10%, up from 5%.

While LVR restrictions are easing, the Debt-to-Income (DTI) settings will remain in place, ensuring high-risk lending is kept under control and helping prevent an unsustainable property boom.

The RBNZ emphasised that property values are within a “range of sustainable estimates” and that mortgage lending growth remains moderate, with high-risk lending staying low.

What This Means for Buyers and Investors

With lower interest rates and eased LVR restrictions, buyers—especially first home buyers—may find improved opportunities to enter the market. Investors, too, could benefit from easier access to credit while maintaining a responsible approach to lending.

In short, the current environment presents a window of opportunity for those looking to purchase, as favourable lending conditions and cautious buyer sentiment create potential for smart property decisions before the market rebounds.