Average size of mortgages approved to first home buyers is almost $600,000 and more than 40% are low equity loans

First home buyers embarked on a debt binge in 2025, with their mortgage approvals hitting a record high.

According to Reserve Bank figures, almost $19 billion of new mortgages were approved to first home buyers in 2025. That was up a whopping 18.8% compared to 2024, and is almost certainly a record high for annual mortgage lending to first home buyers. (Reserve Bank figures in this data series go back to 2014).

Mortgage activity was particularly strong towards the end of last year, with approvals to first home buyers hitting $2.15 billion in the month of December, up a third compared to December 2024.

That was the first time mortgage approvals to first home buyers have exceeded $2 billion in any month of the year.

Those were not the only new mortgage records to be set by first home buyers last year.

The average size of the loans approved to first home buyers hit a record high of $597,720 last December, trumping the previous high of $595,398 set at the height of the last housing boom in May 2022.

The figures suggest first home buyers are tending to fall into two main groups.

Those who tend to be a bit more cautious and are buying cheaper properties with at least a 20% deposit, and those who are stretching themselves by taking out low equity loans to buy more expensive properties.

More than 40% of the mortgages approved to first home buyers last year were the higher risk, low equity loans, where buyers had less than a 20% deposit.

The number of low equity mortgages approved to first home buyers hit a record monthly high of 1500 in December, up 42% from December 2024.

The percentage of first home buyers taking out low equity loans has been steadily rising for more than a decade, from 25.9% in December 2014 and hitting a monthly high of 46% in September last year, before dropping back to 41.7% in December.

The average size of the low equity mortgages approved to first home buyers in December was $651,000, compared to $559,000 for first home borrowers with at least a 20% deposit.

This was accompanied by an increase in the prices first home buyers were paying for a home.

Interest.co.nz estimates their average purchase price increased to $709,000 in December 2025 from $672,000 in December 2024, up 5.5%.

By comparison, the Real Estate Institute of New Zealand's House Price Index decreased 0.4% over the same period.

First home buyers buying with less than a 20% deposit are particularly at risk because they have less equity in their property and therefore less room to rearrange their finances if they suffer a financial setback such as a reduction in income, or a steep rise in mortgage interest rates.

That risk is compounded if it occurs at the same time as a reduction in property values.

However, as the latest figures show, there are plenty of both borrowers and lenders prepared to take the risk.