New Zealand Mortgage Calculator 2024

What is the RBNZ debt-to-income (DTI) limit in New Zealand?

From 1 July 2024, the Reserve Bank of New Zealand (RBNZ) introduced debt-to-income (DTI) ratio restrictions on banks. For owner-occupiers, no more than 20% of a bank's new lending can go to borrowers with a DTI above 6 (meaning total debt cannot exceed 6 times annual gross income). For investors, the cap is a DTI of 7. A household earning $120,000 per year could borrow up to $720,000 under the 6x DTI guideline. DTI restrictions apply at the bank portfolio level, so lenders retain some flexibility for individual borrowers who can demonstrate strong serviceability.

What are LVR restrictions in New Zealand?

The RBNZ imposes loan-to-value ratio (LVR) restrictions to limit high-risk lending. For owner-occupiers, banks must limit lending above 80% LVR (below 20% deposit) to no more than 20% of new lending. For investors, the limit is 35% deposit (65% LVR), meaning investment property loans above 65% LVR are restricted to 5% of new lending. These restrictions mean most buyers should aim for a 20% deposit for owner-occupier purchases. Some lenders offer welcome home loan products or other low-deposit options for first home buyers.

What are current mortgage rates in New Zealand?

New Zealand mortgage rates are set by individual banks and non-bank lenders based on their funding costs, which are influenced by the RBNZ Official Cash Rate (OCR). As of mid-2024, floating (variable) rates for owner-occupiers are typically 8.0–8.5%. Fixed rates for 1-year terms are approximately 6.8–7.5%, with 2-year fixed rates similar. Longer fixed terms (3–5 years) are sometimes lower. Interest rates have been high since 2022 as the RBNZ raised the OCR aggressively to combat inflation. Rate cuts were expected to begin from late 2024. Use comparison sites to find the latest rates.

How does fortnightly repayment save money in New Zealand?

Paying fortnightly instead of monthly results in 26 payments per year rather than 12. Since each fortnightly payment is half the monthly amount, this is equivalent to making 13 monthly payments per year. The extra repayment reduces the principal faster, meaning less interest is charged each period. On an $600,000 loan at 6.5% over 30 years, fortnightly repayments can save approximately $80,000–$100,000 in interest and reduce the loan term by around 4 years. Most NZ banks allow fortnightly or weekly repayments at no extra cost.