How the RBNZ’s December 2025 LVR Easing Changes the Game for First-Home Buyers and Investors

In October 2025, the Reserve Bank announced it will ease loan-to-value ratio (LVR) restrictions from 1 December 2025. This marks a shift away from the tighter housing credit policies of recent years and has significant implications for both first-home buyers and property investors.

This post explains:

1. What the LVR easing means in practice

2. Who benefits and who should still be cautious

3. How advisers and clients can adjust their strategies

What’s Changing in Practice

• Up to 25% of new loans to owner-occupiers can now be issued with a deposit of less than 20%, up from 20% previously.

• Debt-to-Income (DTI) limits will remain in place to ensure borrowers stay within safe lending levels.

• The Reserve Bank believes house prices are now closer to sustainable levels, reducing the need for restrictive lending rules.

• LVR restrictions have existed since 2013 and have been adjusted over time to balance financial stability and housing affordability.

Winners and Risks

Who benefits:

• First-home buyers with smaller deposits now have a better chance of securing lending approval.

• Dual-income households may find more flexibility in structuring deposits and borrowing.

• Investors with limited equity can more easily leverage existing properties for growth.

  
  

Risks to consider:

• DTI limits will still restrict borrowers with high debt or limited income.

• Borrowers with higher loan sizes may face stricter serviceability tests or higher interest margins.

• Over-leveraging remains a concern if property values fall.

• Some banks may apply tighter internal criteria even under the new rules.

Strategic Moves for Advisers and Clients

1. Reassess deposit strategies. Clients who were previously held back may now qualify under the relaxed rules.

2. Review refinancing options. Equity release or restructuring may be easier under the new LVR settings.

3. Continue stress testing. Even with greater flexibility, clients should plan for possible rate increases or income changes.

4. Act early. Those who move quickly will have more lender options before internal risk policies tighten.

5. Communicate clearly. Clients must understand that “easier” lending does not mean “risk-free” lending.

The December 2025 LVR easing signals a positive shift in New Zealand’s housing finance landscape. However, this is not a free-for-all. Careful planning, strong advisory input, and conservative borrowing practices remain essential.