Record levels of first home buyers taking out low deposit loans
About half of all first home buyer lending has been done at a less than 20% deposit in recent months.
Tuesday, December 23rd 2025, 10:01AM
by Sally Lindsay
Across the country first home buyers have taken advantage of lower mortgage rates and below-peak property prices, maintaining a record share of market activity in the final months of this year, Cotality data shows.
The share of purchases going to first-home buyers in this year is near record levels, Kelvin Davidson, Cotality chief property economist says.
He sums it up as being, if not a record, close to it and a sustained peak through last year and this year.
First-home buyers are able to access low-deposit lending through the banks. About 12-13% of lending to owner-occupiers was done at loan-to-value ratios of more than 80%, well below the 20% limit.
Davidson says first home buyers have been capitalising on lower house prices, lower mortgage rates, less competition from other buyer groups and new builds coming to the market.
He says there is a good stock of listings, even though they are 13% down on a year ago at 29,645 and first home buyers have access to KiwiSaver.
Data on November’s KiwiSaver figures show 4,660 withdrawals were made for first homes, totalling $209.2 million.
About 28% of purchases nationwide were made by first home buyers in October and November, while investors represented 25%. In Auckland they were responsible for 29% of purchases and 30% in Wellington.
To September this year, the median price paid by first home buyers has been $700,000, up from $695,000 last year. This sits below the overall median of $770,000 but well above the lower quartile of $585,000.
Davidson says this pattern shows that many first home buyers are not targeting the cheapest homes. “The typical first home buyer doesn’t always enter at the bottom of the market and work their way up; many enter the market well above the bottom rung of the ladder.
First home buyer market share has increased across all value tiers: from 26% to 35% in the bottom 30% of the market since 2015, with similar gains in both the middle 40% and top 30%.
“Lower mortgage rates and earlier price falls have changed the equation for first home buyers. Many now find conditions workable in a way they did not during the previous cycle.”
He says conditions are likely remain favourable for first-time buyers for the next 12-18 months.
"House prices might show more growth, but they're unlikely to race away. I think first-home buyers will be a good strong segment of the market for a period to come."
He said what happened to investors would also be interesting.
One of the more notable shifts in buyer behaviour over the past year has been the increasing presence of mortgaged multiple property owners, who accounted for 25% of purchases across October and November combined, the highest share since 2021.
Davidson says activity has been most evident at the more affordable end of the market with the improvement in mortgage serviceability central to the return of smaller and newer investors.
“Lower mortgage rates have reduced the cashflow pressure investors were facing during the downturn and when interest deductibility was being phased out, particularly for those targeting lower-priced properties.
“Many are focusing on existing dwellings, with the numbers starting to stack up again in a way they didn’t over the past couple of years.”
New-build properties continue to attract interest from investors as well, he says, supported by relative certainty around costs and rental demand.
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