Lending Test Rate NZ Update: Impact on Borrowing Power

Update 2025: Banks and non-banks continue to adjust the lending test rates they use to calculate loan affordability. These changes are influenced by several factors, most notably, economic conditions and updates to the Official Cash Rate (OCR) by the Reserve Bank of New Zealand (RBNZ).

In August 2024 the OCR was 5.25% but has steadily declined and now is 3.25% as of August 2025. This shift could have a major impact on how much borrowers can qualify for, potentially increasing borrowing power.

What Is a Lending Test Rate?

When lenders assess your home loan application, they use a test rate (also called a servicing rate) to “stress test” your ability to repay the loan if interest rates rise in the future. Key facts:

• The test rate is higher than the actual interest rate
• It doesn’t affect your real repayments, but it does affect how much you can borrow
• The lower the test rate, the higher your potential loan approval amount

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What Changed?

Prior to August 2024, lending test rates had been sitting at around 8.95%. Lenders are regularly adjusting their lending test rates. In the first few months of 2025 these test rates have reduced even further and are now sitting around, or close to 7.0%.

Why this Matters for You?

The percentages are small, yet a small reduction can add tens of thousands to your borrowing capacity, potentially the difference between buying now or waiting.

How We Can Help You Borrow More

At Platinum Mortgages, we understand that getting a home loan isn’t about just ticking boxes – it’s about understanding your full financial picture and matching you with the right lender.

Here’s how we help increase your borrowing power:

• We compare banks and non-bank lenders with different test rates and criteria since some are more flexible than others.
• We know which lenders offer higher borrowing limits for specific income types, property types, or deposit sizes.
• We structure your application smartly, so your income, debts and expenses are presented in a most favourable way.
• We explain your options clearly so you know what’s possible today, and how to improve your borrowing capacity over time.

Even a small shift inn lender policy can mean tens of thousands more in borrowing power, or the difference between an approval and a decline.

Let’s Talk About Your Next Move

Whether you’re buying your first home, upsizing, or exploring investment opportunities, now is the time to act while lending conditions are easing.

Not sure where to start? That’s what we’re here for. Book a free, no obligation chat with our mortgage brokers you can trust in New Zealand and get:

• Personalised advice based on your income, deposit and goals
• Insight into which lenders will work best for your situation
• A clear roadmap to turn your property goals into reality.

★ We Are Trusted

Angela is an accredited Financial Adviser, licensed under FSP742251 and has been in the Financial Industry since 2006. Our 5-star Google reviews reflect the excellent customer experience we promise — making your home loan journey positive, stress-free, and rewarding. At Platinum Mortgages, our clients are the reason we exist — so you can be confident every step is guided by genuine care and expertise.