Ryan Edwards
Tuesday 2 September ‘25
In 2023, the Reserve Bank’s Official Cash Rate (OCR) peaked at 5.5%, pushing 1-year fixed mortgage rates above 7%. That made borrowing expensive and cooled the housing market. Fast forward to September 2025: the OCR has dropped to 3.0%, and most banks are offering 1-year fixed rates around 4.8–5.0%. That’s a drop of nearly 2% in just a year.
For a typical $600,000 mortgage, that means monthly repayments are down by hundreds of dollars compared to last year. For many, it’s the difference between “just out of reach” and “let’s make an offer.”
Lower rates are already making a difference. National house prices have stabilised (median $761,000, flat year-on-year), and sales volumes are starting to pick up. First-home buyers remain active, making up about 25% of all purchases, while investors are slowly returning as lending rules and tax settings become more favourable.
But it’s not a return to the wild days of 2021. New lending rules, like debt-to-income (DTI) caps, mean banks are still careful about how much you can borrow. That’s keeping the market balanced, with more choice for buyers and realistic expectations for sellers.
First-home buyers: Lower rates mean your borrowing power improves, and repayments are less daunting. With government grants and low-deposit loans still available, now could be a smart time to act, especially before competition heats up.
Investors: The return of interest deductibility and a shorter bright-line test (now just two years) make property investment more attractive again. Yields are improving, especially in regions where prices dipped but rents held up.
Sellers: More buyers are coming back, but they’re still value-conscious. Well-presented, realistically priced homes are selling, especially in affordable segments and growth regions like Canterbury and Waikato.
Falling mortgage rates are breathing new life into the property market. Whether you’re buying or selling, the key is to stay informed and act decisively. Talk to your mortgage adviser about locking in a sharp rate, and work with your agent to price and present your property for today’s market.
The worst of the downturn appears to be behind us. With rates easing and confidence returning, your next property move could be closer than you think.
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