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In in July 2008, the Royal Bank of NZ in line with the USA and the UK started lowering interest rates to cope with the GFC effects, and by April 2009 the key rate was down a record low 2.5%, where it remained until May 2010. 


Then the RBNZ decided to raise it by 25 basis points. In July 2010, the OCR was raised again by another 25 basis points to 3%. However, in March 2011, the key rate was slashed to 2.5% to cushion the economy after the Christchurch quake in February 2011.


Following the movements of the key rate, the floating mortgage rate dropped to 5.9% in April 2011, from 10.71% in April 2008. The three-year fixed rate slightly fell to 7.05% in April 

2011, from 7.81% a year earlier.


For foreign investors, terms terms are similar to what you get from the overseas banks on Aussie property, so typically 80% in NZD or 70% in multi currency. Rates are currently around 5.1% based on a 3.6% cost of funds and 1.5% margin. They may increase the margin to 1.75% or even 2% though if the loans are small – like $300k/$400k. 


Also investors need to be mindful of the following:

Security property must be a residential property and must not be in an earthquake prone zone. If purchasing in Auckland that is fine. But if purchasing in Christchurch or Wellington please check with the Bank as there are some areas they can not lend against.

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