Debt-to-Income Ratios - What the DTI Rules Mean for Canterbury Buyers

Since 1 July 2024, the Reserve Bank of New Zealand has enforced Debt-to-Income (DTI) restrictions across all registered banks. These rules affect how much some borrowers can borrow relative to their income and apply to both owner-occupiers and investors. Understanding how they work - and how Canterbury buyers are positioned within them - matters for anyone planning a property purchase in 2026.

What Is a DTI Ratio

A debt-to-income ratio measures total debt compared to gross annual income before tax. It is calculated by dividing total debt by total annual gross income. For example, if you earn $100,000 per year and have total debts of $500,000, your DTI ratio is 5. All debts are included: mortgages, personal loans, car loans, student loans, and credit card limits (not current balances - limits).

The RBNZ's DTI Limits

Banks can make just 20% of new owner-occupier lending to borrowers with a DTI ratio over 6, and 20% of new investor lending to borrowers with a DTI ratio over 7. Banks are not banned from high-DTI loans, but they are limited to 20% of their new lending above these thresholds. Most borrowers need to stay within the limits.

Important Exemptions

New builds are exempt from DTI restrictions - loans to purchase newly constructed homes or to build are not counted against the DTI speed limits. This is specifically designed to encourage new housing supply. Refinancing an existing mortgage without increasing the loan amount is also exempt. Bridging finance is exempt. Rental income also counts toward total income in the DTI calculation, which can improve an investor's position.

LVR Rules Were Eased in December 2025

From 1 December 2025, banks can make up to 25% of new owner-occupier lending to borrowers with deposits under 20% (up from 20%), and up to 10% of new investor lending to borrowers with deposits under 30% (up from 5%). Having both DTI and LVR restrictions allows each tool to be set slightly less restrictively than if only one were in use.

How Canterbury Buyers Are Positioned

Canterbury buyers are generally well-positioned relative to DTI restrictions compared to Auckland or Wellington. Canterbury's price-to-income ratio of approximately 4.60 is meaningfully below Auckland's 5.67 and Wellington's 5.00. The typical Canterbury buyer purchasing the typical Canterbury home operates at a DTI well within the 6x owner-occupier limit without needing to access the high-DTI speed limit allocation. DTI restrictions have their biggest practical impact in expensive markets where prices are significantly higher relative to local incomes - primarily Auckland and resort markets like Queenstown. In Christchurch and Selwyn, the average property purchase is more likely to fall within normal DTI parameters.

DTI data from RBNZ, Harcourts, One Stop Financial, MTF Finance, and MoneyHub NZ. For general information only - not financial or mortgage advice. Always consult a qualified mortgage adviser for specific borrowing guidance.