The new normal is a million dollars of debt
The seven-figure mortgage used to signal wealth. Now it signals what it costs to buy a house in Auckland. Available Centrix data reported by the NZ Herald showed nearly 103,000 borrowers held million-plus mortgages, representing 8.5% of all borrowers, roughly double the figure from 2019. At the extreme end, $2m-plus mortgages had risen from 6,150 to 14,104 over the same period.
This is not a story about the rich. A third of million-plus mortgage holders are aged 40-49, 30% are in their 30s, and two-thirds are in Auckland. These are working-age, economically active households whose spending power is being consumed by debt servicing.
Rates fell but the pain didn’t
The Reserve Bank has cut aggressively. The standard 1-year fixed rate sat at 5.13% and floating at 6.16% as of the most recent RBNZ data. That is a meaningful drop from the February 2024 peaks, when floating hit 8.61% and the 1-year fixed rate reached 7.73%. But it is still more than double the sub-3% rates at which much of the current million-plus stock was originated.
Earlier Centrix analysis found that a 1% rate increase on a $1m mortgage adds nearly $200 to weekly repayments. For borrowers who fixed at 2.5% in 2021 and rolled onto current rates, the doubling in interest cost has been a structural hit to household cash flow that rate cuts have only partially unwound.
The broader picture is equally bleak. RNZ reported that average weekly mortgage repayments rose from $475 in 2022 to $606 in 2023, a 27% jump in a single year. Financial Mortgage Advisors Association data found 59% of New Zealanders were paying more than 30% of household income on home loan costs, the standard international threshold for housing stress. Nearly one in four was spending more than half.
Some borrowers game the system while others are trapped in it
In November 2025, Tella Mortgages chief executive Andrew Chambers revealed the gulf between those who can play the system and those stuck in it. High-balance borrowers have turned refinancing into a cash-flow strategy: “There are people out there with $1m to $1.5m of debt, and every three years they refinance – that’s a winter holiday to Fiji with the family,” he said. Cash incentives run at 0.9% of loan value for switchers, netting thousands.
Meanwhile, 27% of mortgage-stressed borrowers are mortgage prisoners, unable to refinance because they cannot meet current servicing requirements. They are locked into their existing lender and rate with no competitive option. The market has split into two classes: those sophisticated enough to profit from their leverage, and those being crushed by it.
The spending drag is already hitting businesses
This is where the story crosses from housing into every other sector. The OneChoice Generation Debt Report from April 2025 found 75% of Kiwis have cut back on social spending, with over a third making significant reductions. Nearly 70% carry some form of debt, with Millennials at 77%. Tracy Hemingway, Director and Financial Advisor at DebtFreeDiva, said in the report: “Young Kiwis are facing a perfect storm of financial pressures. Rising living costs and stagnant wages mean many are struggling just to cover essentials like rent and groceries, let alone save for the future.”
For business owners, the maths is straightforward. When three-quarters of the population is cutting discretionary spending, the pain lands squarely on restaurants, retailers, travel operators, gyms, and anyone selling something that is not food or shelter.
The worst may still be ahead
The RBNZ’s May 2024 Financial Stability Report found non-performing mortgage lending had risen from 0.2% to around 0.5%, with arrears exceeding 2020 peak levels. The central bank judged the impact had been “more benign than generally expected”, noting borrowers were drawing on savings buffers and reducing principal repayments. But it warned that “a small portion of borrowers will have few options available and are at risk of default”, and that the full impact often only materialises after savings are exhausted.
In 2023, the RBNZ had projected debt servicing costs would rise from 9% to 22% of disposable income for mortgaged households. Rate cuts have eased the peak, but the structural problem remains. The DTI framework introduced in 2024 constrains new lending, but does nothing about the existing stock of highly leveraged loans already on bank books.
The million-dollar mortgage is no longer a marker of affluence. It is the price of entry to homeownership in major centres, and the households carrying that debt are spending less on everything else. Until house prices fall, incomes catch up, or rates drop dramatically further, the consumer economy will keep running on fumes.
Sources
- NZ Herald: Through the roof: Thousands more $2 million dollar-plus mortgages
- NZ Herald: Rise in million-dollar mortgages prompts debt warning
- OneRoof: ‘There are people with $1m of debt, and every three years they refinance – that’s a holiday to Fiji’ (2025-11-16)
- RNZ: Homeowners feeling the pinch amid high mortgage repayments
- RNZ: First-home buyers’ increased debt burden revealed
- OneChoice: Generation Debt Report 2025 (2025-04)