Banks claim many borrowers are making extra repayments to get ahead on their home loans
Tuesday, 28 April 2026
Kiwibank says its mortgage customers are repaying their home loans faster than rival big banks.
Nicole Pervan, Kiwibank general manager for home lending, said: “Kiwibank home lending customers consistently pay down their home loans faster than the market average.”
Analysis of data collected by the Reserve Bank, Pervan said, revealed its customers’ repayments after interest were 36% higher than the market average.
They were doing it in two ways: setting their scheduled repayments 11% higher than the market average, and making more “excess” payments.
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Banks allow borrowers to make excess, or extra repayments without attracting early repayment charges, though some are more generous in their allowances than others.
Many borrowers also “structure” their loans to have part on floating rate revolving credit loans, which can be repaid at any time without penalty.
“Many of our customers fix part of their home loan for certainty, and keep part on a variable or offset loan for flexibility with extra repayments,” Pervan said.
In recent years, as criticism of bank profits has mounted, Australian-owned banks have been keen to push the message that many of their home loan customers are doing quite the opposite of struggling with their loans, and are ahead of where they initially expected to be when they first took their loans out.
May sees ANZ, BNZ and Westpac all release their half-year profits announcements.
People repay their home loans more rapidly than they are contractually bound to for a variety of reasons, including to get free of debt quicker than standard 30-year mortgage terms, and to save tens, if not hundreds of thousands of dollars in interest.
Pervan said at the end of March, 35% of the bank’s home lending customers on fixed loan terms were paying above their minimum repayment amount.
And during the previous 12 months, 30% had made additional lump sum repayments on fixed and variable rate loans accounts.
ANZ said more than 44% of its home loan customers were ahead on their repayments by six months or more, and 48% held savings buffers of at least $5000.
ANZ had some of the most flexible home loans, allowing borrowers to increase regular repayments by up to $250 a week, and also pay an extra lump sum repayment of up to 5% of their current fixed rate loan amount each year.
A spokesperson for the bank said there was a trend for borrowers who had fixed rate portions of their lending maturing, choosing to maintain, or increase their repayments, even if they were refixing at a lower interest rate.
Borrowers could use those refix moments to pay lump sums off the amount they owed on their loans before refixing.
A Westpac NZ spokesperson said that at the end of March, 65% of the bank’s home loan customers were at least three months ahead on repayments, with an average repayment “buffer” of 10.6 months.
“This is mainly thanks to customers paying more than the minimum required amount on their regular fixed repayments,” the spokesperson said.
“Generally speaking, homeowners who are looking for flexibility of repayments and the opportunity to pay off their home loan as quickly as possible should consider having a mix of fixed and floating,” he said.
One kind of home loan set-up some borrowers favour are mortgage offset accounts, which are transaction accounts linked to home loan, where the balance of the account is subtracted from the outstanding loan principal before loan interest is calculated.
Westpac and BNZ have offset accounts their borrowers can use.
“Westpac offers both revolving and offset facilities, where larger sums can be put into the home loan as it suits customers, without penalty, while still giving them access to the funds if they need them,” the Westpac spokesperson said.
James Leydon, BNZ’s general manager of home lending, said: “55% of BNZ customers are at least two years ahead of their mortgage, which reflects how motivated New Zealanders are to pay down debt when they have the means to do so.
“On fixed-rate home loans, customers can make extra repayments of up to 5% of their outstanding balance each year without an early repayment charge, whether that’s a lump sum, increased regular repayments, or a mix of both,” he said.
ASB did not provide data on how many of its borrowers were ahead on their home loans, but Adam Boyd, executive general manager of personal banking at ASB, said it offered repayment flexibility.
“Customers can increase their regular repayments by up to $500 a fortnight without incurring additional early repayment adjustment costs,” he said.
“A customer with a $500,000 loan can save up to $71,000 in interest costs by increasing their repayment by $100 a fortnight, assuming a rate of 6% and a 25-year loan term,” he said.