Farmers Drive Rural Lending Growth in 2026
The rural lending sector is experiencing a notable turnaround, with farmers taking on more debt this year compared to the previous year. According to Reserve Bank of New Zealand (RBNZ) figures for August, the total rural sector debt increased by 2.4% in the 12 months to August 2026, a significant shift from the negative growth of -0.2% in the same period last year. This marks the highest annual growth in rural debt since 2019, indicating a renewed appetite for borrowing among farmers after a period of debt repayment.
Despite this positive trend, rural debt remains relatively modest compared to other sectors. Farmers owe banks and other financial institutions $65.7 billion, which is significantly less than the $143.8 billion owed by businesses and the $403.3 billion owed on housing. However, the improvement in rural lending is a bright spot for banks, as other lending sectors show signs of slowing down.
Business lending has also seen growth, increasing by 4.1% over the 12 months to August this year, nearly double the 2.1% growth seen in the same period last year. However, there are tentative signs that this growth may be starting to waver, with annual growth levels declining for three consecutive months, from 4.9% in May to 4.1% in August.
Residential mortgage lending has shown some growth as well, with a 5.5% increase over the 12 months to August this year, up from 5.2% in the same period last year. Yet, this sector too is experiencing some instability, with annual growth declining steadily from 5.9% in March to 5.5% in August. The Reserve Bank's monthly figures suggest that a decline in new mortgage lending is already underway.