COMMERCIAL PROPERTY LOANS
95% HOME LOANS
EASY BUSINESS LOANS
Variable 6.50**% 6 Month Fixed 5.69% 1 Year Fixed 5.15%
18 months 5.12%
2 Year Fixed 4.99%
3 Year Fixed 5.65%
4 Years Fixed 5.59% 5 Year Fixed 5.59%
For good sized lending and low Loan to Value Ratio (LVR), Reliance Financial Group may get* these rates or even better depending on loan size. *Conditions apply. **From 16th April
The Reserve Bank of New Zealand today cut the OCR by 25 basis points (bps) to 3.50% as expected. Reserve Bank has delivered 200bps of cuts since August 2024.
While cutting the OCR, RBNZ’s Monetary Policy Committee also mentioned as the extent and effect of tariff policies become clearer, it has scope to lower the OCR further as appropriate. It means OCR may go down further in future. The committee noted Trump’s tariff policies posed a negative risk to the New Zealand economy.
Banks moved swiftly to cut their variable mortgage rates. ASB announced it was dropping interest rates for floating home and business loans, along with savings accounts.
Its housing variable rate was reduced 25 basis points to 6.64%, the orbit variable rate was reduced by 25 basis points to 6.74%
Meanwhile, Westpac's choices floating and choices offset home loan rates will drop by 25 basis points to 6.74%, and its choices everyday advertised revolving rate will drop by 25 basis points to 6.84%.
It said most variable business loan rates will also reduce by the same amount, and announced a 25 basis point cut to interest on savings accounts.
At Kiwibank, variable and offset variable rates were lowered by 25 basis points to 6.50%. Its revolving loan was lowered 25 basis points to 6.55%.
Deposit rates were also lowered by 25 basis points.
ANZ dropped its floating home loan rates by 20 basis points to 6.69%, and flexible loans to 6.80%. It also reduced its serious saver rate by 20 basis points. BNZ is also cutting floating rates by 25 basis points.
Note that none of the banks has come out to reduce fixed rates.
The basic idea behind interest deductibility is that if you own a rental property with a mortgage, you can deduct the interest you pay on that mortgage from the income you receive as rent when determining your taxable income.
In 2021, rules were put in place that meant:
There were some exceptions to this, such as if the property was a new build.
Interest deductibility has been restored. This means you can now claim interest as an expense for any residential investment property you own, irrespective of when the rental property was purchased or when the loan was drawn down. These changes were implemented in two phases:
Tax calculations can be complex and affect investors differently. The savings from these tax changes may differ, as tax rules vary according to property type, date of purchase and who is renting the property.
Example of deducting home loan interest costs
Here’s a scenario of how much an investor could save for an investment property with:
Let us take a home loan of $650,000 over 30 years at 5.29% p.a. one-year fixed interest rate and having Principal and interest repayments. Let us take 33% income tax rate in this scenario.
With the change from 80% to 100% interest deductibility, the investor could save an additional amount of approximately $2,092 in the tax year ending 31 March 2026 – that's $40 per week.
The bright-line test (or bright-line rule) means if you sell a residential investment property – such as your rental – within a set time after purchasing it, you may have to pay income tax if you make a capital gain on the sale. There are some exceptions to this rule, such as:
Until 30 June 2024, New Zealand’s bright-line test applied to properties that were purchased on or after 27 March 2021 and sold within five years (for qualifying new builds) or within 10 years (for all other properties). If you purchased your property between 29 March 2018 and 26 March 2021, and sell it within five years, it will fall under the current bright-line test too.
Changes to the bright-line test
From 1 July 2024, the bright-line test returned to a two-year period. This means if you sold your rental on or after 1 July 2024, you’ll be taxed on any capital gains you make from the sale if you’ve owned the property for two years or less.
The main home and rollover relief exclusions still apply, but they’re tested slightly differently.
Main home
Your property will be considered a ‘main home’ if most of the home was used for most of the time you owned the property. ‘Most’ in this case means more than 50% (this is called a ‘predominant use’ test).
Rollover relief
Rollover relief is getting simpler. Now, if the property is transferred between ‘associated persons’ (for example, close relatives or the beneficiaries of a trust), the bright-line test won’t apply, as long as those persons have been associated for at least two years before the transfer.
It’s important to get independent advice
If you own a residential investment property, it’s a good idea to understand how the changes to interest deductibility and the bright-line test could impact you. We recommend you contact your tax adviser or accountant.
Without any obligation, we can help you in finding a suitable tax adviser cum accountant. Contact us.
Some of New Zealand’s biggest banks are cutting their mortgage test rates or continuous basis as rates fall. For instance ANZ now tests loan affordability at 7.10% which has come down from one time rate of 8.95% when interest rates were on top.
Banks use mortgage serviceability rates to calculate the repayment capacity of would-be home loan borrowers’ so banks can be sure borrowers can meet repayment requirements if interest rates rise. A lower test rate increases borrowers' borrowing capacity.
While residential property values continued to decline slightly in September month as per QV Report, but the recent 50 basis point cut in OCR is an indication that there are better times ahead for both property investors and renters.
Lower interest rates and the changes the Government is making to the rental sector will make it more attractive for people to invest in it. This will increase the supply of rental property, and increased supply will give renters more choice at a better price. You can imagine how motivated home buyers and investors will be when they see OCR going down from 4.75% now to 3% in later next year as forecasted by economists.
We are starting to see signs of investors getting ready to get back into the market.
Interest rates are falling, banks are keener to lend, interest deductibility is returning, and positive changes are being made to the Residential Tenancies Act, so there is a better environment for people wanting to get into the business of providing rental accommodation.
There are still bargains to be had in the property market, particularly for investors ready to put in the hard work and add value to their investment by renovating the properties they buy.
On the downside, other costs like rates, insurance and maintenance are still high. All these factors need be taken into consideration.
We get the feeling that cashed-up investors will be first off, the block, while newer investors, who are more reliant on borrowing, may wait for interest rates to fall further.
According to the CoreLogic Home Value Index, New Zealand's median dwelling value was $812,195 at the end of March, the highest it has been since June last year.
The median value increased by 0.4% in Feb and 0.48% in March, 25 after a flat result in January 25.
"The latest figures confirm that the market is now into its next phase of growth, on the back of lower interest rates and improved affordability on the back of previous value falls," CoreLogic said.
"The falls in mortgage rates since around July or August last year were always going to take a little bit of time to flow through to house prices, given the weak economic environment and subdued household confidence," CoreLogic Chief Property Economist Kelvin Davidson said.
The huge housing stock, has been an extra limiting factor for property values, while some households on fixed interest rates from a year ago have also had to be patient before seeing their debt repayments drop.
Signs are becoming clearer that the economy has started to turn a corner and confidence is returning to the property market.
Mortgage Restructuring is not a cumbersome process but involves a bit of common sense with understanding of how mortgage repayment works. It simply involves splitting your home loan in suitable combination of fixed and floating interest rates loans. Then depending on your repayment capacity choose the term over which fixed loan is to be paid, set up repayment amounts so that mortgage is paid much earlier than the standard 30 years and become debt free faster.
It may appear quite confusing to you, but we are experts and we have been doing it on regular basis for last more than a decade, helping our clients cutting off years on their mortgage term.
Faster you finish your loan, more you save in interest cost. For instance, on a loan amount of five hundred thousand dollars, at five percent interest rate if you increase the loan repayment by ten percent only you finish your loan in 25 years and save nearly ninety thousand dollars in interest cost. If you pay extra 140 dollars weekly, you finish the loan in twenty years and save a huge sum of 174,000 dollars in interest.
It is not hard to manage one hundred forty dollars weekly. For instance, you can keep a boarder if your house is big enough. A boarder, thus, can help you reducing your mortgage by ten years and save you 174,000 dollars over the period of loan.
We can examine your loan and restructure it to make you pay it off sooner. We analyse your entire family situation, your income, expense, your future commitments, future interest rate trends and then negotiate with the lender best interest rates for you and split your home loan in fixed and floating components. While doing so we keep in mind that you can live a good lifestyle you want and make best use of money to be debt free earlier than bank’s usual thirty years.
Call us or email us and get your home loan restructured with our extensive experience and expertise today and save your money.
27 Jul 2025