Home lending surges as market stabilises
Home loan activity across New Zealand climbed sharply in the second half of 2024, as falling interest rates and renewed buyer confidence fuelled increased borrowing.
The latest Retail Banking Insights from the New Zealand Banking Association (NZBA) revealed that 56,938 new home loans were issued from July to December—a 21% increase compared to the first half of the year.
The total value of new lending rose by 24.7% to $23.1 billion, reflecting a broader trend of recovery in the property sector.
According to NZBA chief executive Roger Beaumont (pictured), the shift was supported by a drop in the official cash rate from 5.5% to 4.25%, helping to restore momentum in housing.
“The increase in home lending is quite significant,” he said. “It also reflects a growing return of confidence to the property sector,” Beaumont said.
A Trade Me survey of 2,500 buyers and 3,500 homeowners showed NZ property buyer confidence is at a two-year high, with recent trends pointing to potential market stabilisation.
First-home buyers remain active despite challenges
Of the new loans issued, 26.7% went to first-home buyers, with the average loan value for this group rising 4.4% to $493,000. While affordability remains a concern, these buyers continue to make up a substantial share of market activity.
Across the entire home loan market, 1.4 million loans were held by 1.1 million customers. Though 1.5% were behind on repayments, a significant 39.4% were ahead, with many opting to repay more than the minimum to reduce interest over time.
“It’s great to see a large proportion of people with home loans ahead on their repayments,” Beaumont said.
However, there was a notable 33% rise in customers switching from principal and interest to interest-only repayment plans, reflecting pressure on household budgets.
Digital banking grows, branch transactions decline
The banking industry continues its digital transformation, with 7.2 million customers registered for online banking, representing 72.4% of all unique customers, NZBA data showed.
Usage remains high, with 5.7 million users active during the six-month period—a 3% increase on the previous reporting period.
By comparison, ATM transactions accounted for just 1.8% of all activity, and in-branch cash transactions dropped by 4.6%. Overall, 2.1bn transactions were processed across all channels, up 4.8% from the previous half-year.
Savings and credit behaviour show caution
Despite increased borrowing, New Zealanders continue to show prudence in managing their money.
The total value of savings accounts rose by 3.9% to $111bn, although the average balance fell by 6.5%. Term deposits rose 5.2% to $192bn, with a modest increase in average balance to $109,545.
On the credit side, credit card use declined slightly, with the number of cardholders dropping to 2.17 million. However, average spending per account increased to $2,131 per month.
Encouragingly, 66.5% of cardholders paid off their balances in full, avoiding interest charges.
Customer support and complaint handling improve
NZ banks fielded an average of 934,000 customer calls each month, with slightly fewer complaints compared to earlier in the year.
Of the complaints received, just 3.2% required escalation to the banking ombudsman.
Resolution times also improved, dropping from 6.5 to 5.9 days on average, NZBA reported.
As New Zealanders continue adapting to digital banking and fluctuating economic conditions, the banking sector appears to be playing a key role in supporting customer needs—from home lending to financial education and digital engagement.
