The rising unemployment rate has emerged as a critical risk factor. It climbed from 4.0% at the start of 2024 to 5.1% by the end of the year, and is expected to reach 5.2% - 5.3% in the first quarter of 2025, hitting a cyclical high. This contrasts sharply with the central bank's previous interest - rate - hiking cycle, which began in 2021 when the unemployment rate was at a historic low. Currently, the central bank forecasts that the unemployment rate will fall back to 4.9% by the end of the year.
A contradictory scenario has emerged: while some borrowers face financial pressure, the housing market shows signs of recovery. In March 2025, newly approved housing loans amounted to NZ$8.488 billion, the highest since November 2021. The monthly net increase in loan balances reached NZ$1.88 billion, the largest monthly increment since December 2021. The balance of owner - occupied loans reached NZ$273.708 billion (up NZ$1.283 billion for the month), and the balance of investor loans stood at NZ$94.861 billion (up NZ$597 million for the month, the largest increase since April 2021). Investor loans have soared by NZ$2.7 billion in the past six months, far exceeding the annual increase of NZ$345 million in 2023, indicating a significant rebound in investment demand.
