One in every six new home loans written by Westpac this year has been for $1 million or more, fresh data from New Zealand’s third largest bank shows, as Auckland first home buyers stretch to a median purchase price of $900,000 to get on the ladder.
The numbers, reported by RNZ, suggest seven figure mortgages are now a routine feature of the New Zealand housing market rather than the preserve of the seriously wealthy. Across the country average new lending sits at $800,000 to $850,000, with the biggest concentration of million dollar loans in Auckland.
Loan Market mortgage adviser Karen Tatterson said the trend was more common than people might think. “We regularly settle loans over $1 million,” she said. “The average loan size is around $800,000 to $850,000.”
Cotality, the property data firm previously known as CoreLogic, said its most recent first home buyer report showed Auckland first home buyers were paying a median of $900,000. Chief economist Kelvin Davidson said the concentration of million dollar mortgages was no surprise once the geography of the market was taken into account.
“The greatest concentration of million-dollar mortgages would certainly be in Auckland,” Davidson said. “It’s the biggest market and also has reasonably high valued real estate. Proportionally, there would be a smattering in other expensive markets. If you’re going to enter an expensive market with debt you’re probably going to have quite a lot of debt.”
Davidson said Auckland and Wellington tended to combine high house prices with the highest household incomes in the country, which meant the debt to income ratios on these loans were not always as alarming as the raw number suggested. “For a couple earning solid salaries, the debt to income ratio would look more manageable,” he said. “It may not be so manageable for people outside Auckland.”
The repayments on a $1 million loan are, however, eye watering once the bank applies the serviceability tests required by the Reserve Bank. Squirrel chief executive David Cunningham said borrowers needed to be ready for very large repayments before they signed a contract.
“If the affordability was tested at 7 percent, for a 30 year term the annual payments would be around $80,000 for a $1 million loan,” Cunningham said. “Taking account of tax and living expenses, that would imply household income of $200,000.”
That income threshold sits well above the median household income reported by Stats NZ and underlines just how concentrated the market for these loans has become in dual income professional households in Auckland’s central isthmus and central Wellington.
The shift towards larger loans comes against a backdrop of softening prices. The Real Estate Institute reported that the number of sales fell 7.9 percent year on year in April, and several major banks have been warning that some recent buyers are now in negative equity, owing more on their home than it would currently fetch on the open market.
Davidson said negative equity was not by itself a reason for borrowers to panic, provided they could keep meeting their repayments. “It doesn’t necessarily matter. If you’re servicing the debt, the bank isn’t going to come knocking,” he said. “The bigger concern, much more than negative equity, is simply serviceability and that’s going to come down to keeping a reasonable income and keeping a job. That’s always going to be the key thing and I suppose at the moment there’s a wee bit more uncertainty about that, will employment hold up where it is now, there could be some job losses.”
That uncertainty has been sharpened by the wider economic backdrop. Petrol jumped 13 percent and diesel 37 percent in April after the Middle East conflict tore through global crude prices, business insolvencies are running at their highest level in years, and Stats NZ data on household living costs shows poorer households are bearing more of the inflationary load than wealthier ones who have benefited from falling mortgage rates.
There is one piece of reassuring data inside the lending picture. Westpac’s interim result, where it posted a half year net profit of $545 million for the six months to March, also disclosed that 42.9 percent of its home loan customers were paying more than the minimum required repayment, up from 40.3 percent a year earlier. That suggests many borrowers, including those carrying large mortgages, are using the run of recent interest rate cuts to chip away at principal rather than to fund extra spending.
First home buyers as a group are also more active than they have been for years. Cotality data shows 24,800 first time buyers purchased properties in the year to the first quarter of 2026, the highest annual total since the third quarter of 2021. With KiwiSaver balances now meaningful for buyers in their late twenties and thirties, and with investor demand still subdued by changes to interest deductibility and brightline rules, first home buyers have for the moment had the run of the market.
The flip side is that they are bringing more debt to the table than any previous generation. A million dollar loan amortised over a 30 year term at 7 percent would see the borrower pay roughly $1.4 million in interest over the life of the loan, on top of the principal, unless they can shorten the term by paying more than the minimum or refinance to a lower rate. As interest.co.nz has previously explained, that interest income is the engine of the major banks’ profitability, and the longer New Zealanders carry larger loans the more the cash flow of an average household is captured by the banking system rather than the wider domestic economy.
For now the loans are getting written. Whether the next generation of mortgage holders can keep servicing them through a fuel shock, a softening labour market and the possibility of more falls in property values is the bigger question hanging over the housing market this winter.
What do you think of the rise of the million dollar mortgage. Is it a sign of an unhealthy housing market or just the new normal in Auckland and Wellington. Share your view in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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