David Hargreaves has a crunch of the mortgage figures for the first six months of 2025 and says these show a return very much to 'normal' patterns after the wild pandemic period and subsequent slump

It's easy to think of the current housing market as being lifeless - because prices aren't currently going up the way we've so often seen them do in the past.

However, in terms of activity - certainly when it comes to people taking out mortgages - the market is now actually very much back to 'normal' after three years in which things were pretty slow following the mighty pandemic surge.

The Reserve Bank put out the mortgage figures for June this week, which means we've now got data to look at for the first half of the year - and we can compare this with the first half of previous years.

I've gathered up the figures for the first six months going back as far as 2019, the last 'normal' year before the pandemic.

The figures are drawn from two data series: There's the new residential mortgage lending by borrower type and the somewhat more recently commenced new residential mortgage lending by purpose.

I have to say, I'm liking the second data set more and more simply because it does give you the detail on how much is being borrowed specifically to buy houses.

And on this score, while it might be tempting to see things as 'quiet' at the moment, the figures don't really suggest that.

According to the RBNZ figures, in the first six months of this year, $26.325 billion worth of mortgages were uplifted for the specific purpose of buying a house. That's well up on the $20.208 billion in the first six months of last year.

And if we look at the first six months of 2019 before the pandemic hit, well that was just $19.387 billion.

But wait, I know what you are thinking, houses cost a heck of a lot more to buy these days - so, you would expect the mortgage figures to be bigger.

True enough. According to REINZ data the median national house price in New Zealand in June 2025 was $770,000, up from just $585,000 in June 2019 - so, up by a not inconsiderable 31.6%.

If we are then to add 31.6% on to that $19.387 billion mortgage figure for the first six months of 2019, it would give us $25.513 billion.

So, in other words, the same amount of activity as seen in the market in the first half of 2019 if applied to 2025 would have given us a first half mortgage figure for buying houses of $25.513 billion - but in reality the figure we got was $26.325 billion. So, this suggests reasonably comparable levels of activity now to those seen in that 'normal' 2019 year.

And the other way of looking at this (and there are those who would say this is the best way, anyway) is to compare the number of mortgages in the first half of 2025 with back in 2019.

In terms of mortgages issued specifically for house purchases in the first half of this year, there were 44,728. In the first half of 2019 there were 44,150.

So, here's a table that outlines much of the above.

Note that the total amount borrowed during the first six months of the year, at $43.889 billion, is much the highest amount in our seven-year review period - with the very notable exception of that pandemic surge year of 2021, when we saw the remarkable amount of over $50 billion borrowed in the first half of the year.

The other notable feature of the table is the amounts being borrowed for change of loan provider. The $11.063 billion of 'new' mortgages due to changing banks in the first half of the year makes up just over a quarter of the total amount advanced for mortgages in the six months and it is by a long way the largest such amount (IE for change of loan provider) borrowed in the first half of the year.

With something like $200 billion worth of mortgages either on floating rates or up for reset within the second half of the year, we can presumably expect to see these change of provider figures being a big part of the ongoing monthly mortgage data in coming months.

As the below table shows, the number of mortgages representing a change of provider in the first six months of the year, at 16,227, is much the highest total we've seen - and the figure for the first half of 2025 is up some 43.9% on the figure for the same period in 2024 and represents a rate of about 2,700 mortgages a month where the customers are swapping banks.

It just goes to show, people want the best deal they can get and they don't mind swapping banks, that's for sure.

Another point of focus in the mortgage figures is obviously always to see how the first home buyers (FHBs) are getting on.

As we've previously commented, the FHB grouping was quite severely sidelined during the early days of the Reserve Bank's loan to value ratio (LVR) limits, which were introduced in 2013. The early iteration of those limits did disadvantage the FHBs and it wasn't till 2016 when the RBNZ started introducing higher deposit requirements for the investors that the FHBs started to get back in the game.

And they've remained remarkably resilient with their interest in the market throughout the big slump seen from 2022-24.

The latest set of figures shows that the FHBs share of overall borrowing has recently fallen at the expense of investors, though that could perhaps be a bit misleading. The amount borrowed by FHBs this year is up compared with the same period last year and the number of FHB mortgages, at just under 15,000, is up over 14%.

If we take the over $8.5 billion of FHB borrowing and put it against the over $26 billion worth of mortgages specifically for house purchases, it indicates the FHBs are borrowing just under a third of all the money being advanced for house purchases.

So, what about those investors then? Prior to the changes the RBNZ made to the LVR regime in 2016 the investors were at times taking as much as 35% of the mortgage money on a monthly basis. In recent years it's been a lot less.

But now it's rising again.

*(Please note that neither this nor the other table further down the article include the fairly small amounts of borrowing 'for business purposes' in the break-out figures so therefore the figures seen for the first home buyers, investors and other owner-occupiers don't exactly add up to the 'total' figures seen, nor do the percentages add up to 100. Percentages are rounded). 

However, it's not clear from the RBNZ figures what proportion of the apparent increase in investor borrowing might be down to investors changing loan providers. Given the very large amounts of money that are due to changes in loan provider, presumably at least some of this is investors switching banks.

So, while as the table below also backs up, investors are now at their most active level since the frenzy of 2021, we should probably treat these figures with some caution.

Anyway, that's been the first half of the year. Certainly quiet if we talk about house price action, but not really quiet - as these figures show - in terms of activity.

Where do we go from here?

Well, it will be interesting to see. High frequency economic indicators have suggested the economy is once again faltering. The flip side to that is it could see further interest rate reductions, which all things being equal should be supportive of housing activity.

One thing's for sure, the vast amount of mortgage refixing due in the second half of the year will keep the banks busy. And the amount of bank switching will keep them on their toes.

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