Finance costs can make or break the profitability of a development. In the last 12 months alone, shifts in lender pricing have created opportunities for developers to save tens of thousands of dollars on their development debt.
Every year at Lateral Partners, we produce a blog on the current market prices for finance costs. This includes a rundown on interest rate, lender/ establishment fee and line fees. We produce this blog, so it helps our newer developers accurately attribute enough funds to finance costs within their initial feasibility.
Since writing our 2025 finance cost blog, we thought it was worth creating a new blog outlining the changes in price. Locally, we have seen unemployment rising, the cost of living going up, and a recession NZ can’t seem to shake off. With these changes, we have seen the RBNZ move to stimulate the economy and ease the cost-of-living pressures. The OCR has fallen from its high of 5.5% in June 2023 to 2.25% as of February 2026, albeit we are seeing some upward pressure at the moment.
Lowering the OCR has an influence in the non-bank space and their cost of funding. At Lateral Partners, we thought it was important for any developer who may have been sitting on the sidelines, as their specific development didn’t quite stack up, to understand how one factor, being finance cost, has changed.
Below is a copy of the table we published in 2024 for development pricing.
Now here is a table with today’s most recent pricing in the market in February 2026.
Across the board, there is a material reduction in the cost of finance from all lenders, falling as far as 37% from just 12 months ago. Based on a $4M limit with a 12 month term, this is providing savings of $68,000-$117,000, which can make a material difference to the overall feasibility of a development.
A near bank lender in early 2026 is priced below a main bank from little over a year ago which shows just how stark the rate cuts have been. Lateral Partners are seeing some lenders competing on price (and risk) as well because of the high levels of liquidity and mechanisms of a lot of non-banks where they need funds out the door to hit minimum ROI’s for investors. Therefore, the more liquidity in the debt market means the lenders are willing to decrease rates and make their offer more appealing to potential developers.
This understanding of the wider market is why it is crucial to partner with a specialised commercial mortgage broker that has relationships with all the lenders in the space to ensure you are getting the latest, most suited and best-priced loan in the market.
Overall, we have seen some significant savings in the overall finance cost. If you have a development project in mind and are unsure of current finance costs for your project, reach out today.