First home buyers: this market is better for you than it feels

Rates quoted are as at late September 2026 and change often.

I read the Kiwi First Home Buyers Facebook group most days, and the mood is pretty glum. People are getting offers rejected, being told they can’t borrow enough, and watching rates go up. All of that is real. But the market data says buyers have more leverage now than they’ve had in a while.

What a buyer’s market means for first home buyers

Someone in the group shared that they’d offered $940,000 on a house in Maungaraki, with a builder’s report and finance as conditions, and the vendor turned it down. Plenty of people replied with stories like it. It hurts when it happens, but in this market you can walk away. There’ll be another house next month, and the one after that might belong to a vendor who’s been listed for 90 days and wants out.

Another common post: “It’s listed as offers over $700k, but $600k is my limit. Should I bother?” With this much stock, the answer is often yes, as long as your pre-approval is sorted and your offer is clean. A vendor with a long listing often cares more about a sure, quick sale than about the last $20k.

Rates for first home buyers right now

Floating and standard rates have gone up since the OCR increases. There are still options:

• SBS FirstHome Combo: 4.49% fixed for 1 year, for first home buyers only. SBS’s specials also apply to First Home Loans with as little as 5% equity.
• Westpac: cashback for first home buyers taking out a new loan of $250,000 or more.
• Standard bank specials: the best 1-year fixed rate was 4.95% (Kiwibank) as at 25 September.

The catch if your deposit is under 20%: many banks add a low equity margin or put you on standard rates, often 0.70% to 1.00% higher. A group member shared their ASB pre-approval with a 10% deposit: 6.04% floating plus a 0.75% low equity margin, so 6.79%. On a $500k loan that’s about $750 a week.

That’s why the lender matters so much for low-deposit buyers. Part of my job is finding one that doesn’t add the margin, or one with a specific first home product. The Kainga Ora First Home Loan guide covers who qualifies for the 5% option.

New build or existing home?

One thread in the group asked why so many first home buyers go for new-build townhouses when they “pay a premium and risk losing money on resale”. It got nearly 300 reactions and comments, and people disagreed strongly. Both sides have a point.

The case for new builds: lenders are often more relaxed about deposits on new builds, so going below 20% is easier. You get a 10-year building guarantee, lower maintenance and better insulation.

The case against: you pay for the “new”. Resale prices for townhouses in big complexes can sit flat for years, and the defect posts in the group are real. Recent ones include a loose toilet in a 2023 build, a backyard turning into a pond after rain, and cladding that didn’t match what the buyer was told.

My view: a new build can work well if you get an independent builder’s report anyway, read the body corporate or residents’ association rules, and plan to stay at least 5 to 7 years. Make sure your due diligence clause gives you time to do all of that.

What the election could change for first home buyers

The general election is on Saturday 7 November. National is proposing wider access to 5% deposit First Home Loans. NZ First has talked about a Crown shared-equity scheme that would reduce how much you need to borrow.

None of this is law yet, and it might never be. I wouldn’t put off buying because of an election promise, but it’s worth knowing about. I’ll write a follow-up once the results are in.

What to do this month

1. Get pre-approved first. A clean offer with finance already sorted is your strongest negotiating tool.
2. Check what deposit you really need. Depending on the property and lender, 5% or 10% might be enough.
3. Compare lenders, not just rates. A 0.75% low equity margin can cancel out any cashback.
4. Look at properties that have been listed a while. Those vendors are more likely to negotiate.

Common questions

Sources: SBS Bank rates, Westpac rates, Opes Partners, Tony Alexander survey, September 2026, Luminate: election housing policies.

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This article is general information only and isn’t personalised financial advice. Mortgage Sense is a trading name of Yatin Kainth, a Financial Adviser (FSP1007497) providing advice under the Mortgage Managers licence (North West Group Holdings Ltd, FSP682791). See the Disclosure Statement.