David Hargreaves has a crunch of the first-quarter mortgage figures, which show business is getting busier whether we talk about amounts borrowed or the numbers of mortgages taken out

The mortgage market has had its strongest start to a year for four years in 2025.

I've had a crunch of the Reserve Bank (RBNZ) monthly mortgage figures up to the end of March. Using mostly the C33 monthly residential mortgage lending by purpose figures, I've compiled first-quarter figures for 2025 and going back to 2017, which was the start of this particular data series.

The data shows that whether you look at the amount of mortgage money advanced, or the number of mortgages, first-quarter 2025 has been the busiest start to the year for the mortgage market since the super-hot first quarter of 2021. (March 2021 was the biggest ever month for mortgages by value with $10.487 billion worth committed.)

I've also done a break-down of the three major categories included in the overall figures, namely mortgages specifically for a house purchase, changes of loan provider, and top-ups.

There's a few general observations worth making. 

Breaking down the figures into the various categories highlights the extent to which the 'top ups' category tends to skew the overall figures.

This is particularly the case when we look at the average-sized mortgage. 

The first quarter figures between 2017 and now show that in that period the average size of top up has ranged from $62,000 (in 2017) to $115,000 in 2022. Top-ups have by number always been the biggest individual category. This category made up 23,533 (45%) of the 52,323 total of all mortgages in the March 2025 quarter.

Generally, the percentage of top ups (at least in the first quarter of years) has been been declining in recent years. In the first three months of 2018 this category made up as much as 58.6% of the mortgages by number. However, in the March 2025 quarter, top-ups made up just under 45% of the number of mortgages. The 23,533 top-ups in March quarter 2025 was down 40.6% compared with the 39,628 top-ups in March quarter 2017.

Please note with regard to all the tables in this article, that the RBNZ figures also include a small number of loans described as "other commitments".  I've not broken down those "other commitments" figures here. The upshot is that the totals for house buying, changing provider and top-ups do not add up to the totals seen in the 'The lot - total of all mortgages for all purposes' table below.

So, about the mortgages for all purposes figures - IE all the committed mortgages in a month - here is the picture for the first quarter of each year since, and including, 2017.

And here, courtesy of the RBNZ's website, is what the break down of the above figures looks like on a month-by-month basis.

The effect of the top-ups on the overall figures has tended to mask just how large mortgages have become in New Zealand.

In the March quarter 2025 the 'average' mortgage - but including top-ups - was $372,000. And while a lot of people might say $372,000 is plenty big enough for a mortgage, really, it's nothing.

If we look at the figures for just house purchases in the March 2025 quarter, well the average figure was $582,000 - and that's among a sample size of more than 20,000 mortgages, so, it is very much a true representation of the sizes of mortgage being taken up.

Meanwhile the other distortion the inclusion of the top-ups in the overall mortgage figures brings is that it has tended, arguably, to overstate the downturn seen in the mortgage market in the past few years.

Nobody doubts business has been quiet, but if we look at the figures for mortgages deployed for actually buying a house, then it's not quite as quiet as might have seemed.

And here those figures are... 

We can see that the numbers of mortgages certainly dipped in 2023 and 2024. But the tally for the March 2025 quarter actually compares reasonably with numbers in prior years apart from the March 2021 quarter, which is just out there on its own. The numbers of mortgages taken out in first quarter 2025 to buy a house are, for example, virtually the same as the numbers seen immediately pre-covid, in 2018 and 2019.

We can see that over the duration of this table, the average amount per mortgage has risen by $214,000 (from $369,000 in 2017 to $582,000 in the March quarter 2025). 

During that same period, the median house price has risen by $244,000. So, perhaps its simplistic to say it, but the $244,000 rise in median house prices since 2017 is being paid for by homeowners by them on average taking on $214,000 more debt. So, simplistic logic, but our house price rises are paid for largely by us taking on more debt, not by us magically finding more savings.

It's little wonder that with such large mortgages, when coupled with the rate rises we saw between 2021-24, the idea of changing loan provider has increasing appeal. People are prepared to 'shop around' - and when we look at the size of the mortgages being switched, it's hardly surprising. A $679,000 mortgage, even on the 'reduced' rate of 4.99% available today is still costing over $43,500 a year in repayments (assuming a 30-year mortgage).

And there's going to be presumably plenty more action on the change of loan provider front across the rest of this year and into next, judging by the current composition of the outstanding stock of mortgages.

As of the end of March, 52.9% of the outstanding mortgage stock with either on floating rates or fixed for six months or less. That equates to just under $200 billion worth of mortgages that either need to be or can be reset by the end of September this year. 

So, one way or another - whatever happens to house prices - it's shaping up to be a busy year for the mortgage business. A lot of people have a decision to make.

*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.