New Zealand's Housing Loan Risks Accumulate Despite Interest Rate CutsDespite the Reserve Bank of New Zealand initiating an interest - rate - cutting cycle in August 2024 and the continuous decline in mortgage rates, risks in the housing loan sector are steadily mounting. As of March 2025, the total amount of non - performing housing loans reached NZ$2.412 billion, an increase of NZ$249 million (11.5%) from the beginning of the year.

Despite the Reserve Bank of New Zealand initiating an interest - rate - cutting cycle in August 2024 and the continuous decline in mortgage rates, risks in the housing loan sector are steadily mounting. As of March 2025, the total amount of non - performing housing loans reached NZ$2.412 billion, an increase of NZ$249 million (11.5%) from the beginning of the year. This accounts for 0.7% of the total housing loan balance of NZ$368.569 billion, hitting the highest level since April 2013. Among them, impaired loans reached NZ$504 million, surging 25% within half a year. Notably, the current non - performing loan ratio remains significantly lower than the 1.2% peak during the Global Financial Crisis and aligns with the central bank's expectations, with banks predicting an inflection point in the second half of the year.

The rising unemployment rate has emerged as a critical risk factor. It climbed from 4.0% at the start of 2024 to 5.1% by the end of the year, and is expected to reach 5.2% - 5.3% in the first quarter of 2025, hitting a cyclical high. This contrasts sharply with the central bank's previous interest - rate - hiking cycle, which began in 2021 when the unemployment rate was at a historic low. Currently, the central bank forecasts that the unemployment rate will fall back to 4.9% by the end of the year.

A contradictory scenario has emerged: while some borrowers face financial pressure, the housing market shows signs of recovery. In March 2025, newly approved housing loans amounted to NZ$8.488 billion, the highest since November 2021. The monthly net increase in loan balances reached NZ$1.88 billion, the largest monthly increment since December 2021. The balance of owner - occupied loans reached NZ$273.708 billion (up NZ$1.283 billion for the month), and the balance of investor loans stood at NZ$94.861 billion (up NZ$597 million for the month, the largest increase since April 2021). Investor loans have soared by NZ$2.7 billion in the past six months, far exceeding the annual increase of NZ$345 million in 2023, indicating a significant rebound in investment demand.