Private credit in New Zealand: a 2026 guide for wholesale investors

Private credit NZ, in plain terms, means loans made by finance companies, funds, platforms and specialist lenders using investors’ money instead of bank deposits. It is a modest corner of our financial system, but it fills real gaps the banks leave. It can pay well above term deposits, and its risk depends almost entirely on the security and the structure.

One label hides very different risks: a six-month loan over a leased Hamilton office building, a development loan on Auckland apartments still chasing presales, a finance company deposit covered by the Depositor Compensation Scheme, a wholesale fund with no supervisor. Telling them apart is most of the work.

What does private credit actually mean?

Private credit is a loan agreed directly between whoever has the money and whoever needs it, with no bank taking deposits in the middle and no public market setting a price. In New Zealand the lender could be a finance company, a mortgage or credit fund, a peer-to-peer platform, or a specialist business lender that brings investors in on individual loans. The capital comes from individuals, family trusts, companies, family offices and fund managers.

Investors want income at rates the banks don’t pay on deposits. Borrowers want speed, flexibility, or a yes on a deal that doesn’t fit a bank’s credit policy.

Before comparing yields, pin down who is borrowing, what stands behind the loan and how your money is held.

How big is private credit in New Zealand?

Small, by international standards. The Reserve Bank’s May 2026 Financial Stability Report said private credit “appears to play a relatively modest role in New Zealand”. New Zealand fund managers hold only a small share of their portfolios in private credit and private equity, and earlier Reserve Bank work found local bank lending to those firms was limited. Non-bank sources such as wholesale-funded lenders, private credit funds and fintechs are a smaller part of small business finance, clustered in niches like equipment finance.

Modest doesn’t mean untouchable. With withdrawals from private credit firms rising offshore, the Reserve Bank warned of “a risk of contagion, given the opacity of the sector”. The less you can see, the more you rely on someone else’s judgement.

Why are New Zealand businesses turning to private lenders?

Because our banks are, above all, home lenders. University of Auckland research found business lending came to about $128 billion in 2024, just 18% of total bank lending; across the Tasman the share was 30%. Banks still asked for personal guarantees or property security, and the researchers found alternative finance rates of “12-13 percent or more not uncommon”.

Price is part of the story. The Reserve Bank’s May 2026 report found that over three years small New Zealand firms paid about 390 basis points over the 90-day rate for bank credit, and medium firms about 280. Their Australian equivalents paid 294 and 192. Outright refusals were rare, but smaller firms were more often offered terms they couldn’t live with.

Bank rules play a part too. The Reserve Bank’s debt-to-income limits cover bank lending only. In November 2025 it also observed some developers turning to non-bank and offshore lenders. That corner of the market is where investors most need their eyes open.

Savers, meanwhile, want more. With the OCR at 2.75% and big-bank 12-month term deposits around 4%, investors holding large balances are looking further afield.

Where does private credit sit next to term deposits and bonds?

Think of it as a third bucket. A term deposit lends your money to a bank or licensed deposit taker, and since 1 July 2025 the Depositor Compensation Scheme has covered up to $100,000 per depositor at each institution. A listed bond, issued by a company or council and traded on the NZX debt market, can be sold on any trading day at whatever buyers will pay.

Private credit has neither safety net. No scheme covers it, and there is rarely anyone to sell to before maturity. What protects you is the borrower’s ability to repay, the value of the security, and the competence and honesty of whoever arranged and runs the loan. You give up liquidity and a government backstop, and are paid for filling gaps the banks leave.

What kinds of lending sit under the private credit label?

The bottom two rows are both “secured by a mortgage”, which is why they get lumped together. Under stress they behave nothing alike. A half-finished apartment block needs more money, a builder and buyers before it is worth its valuation. A finished house in Tauranga can be valued now and, if need be, sold as it stands.

Strategic Finance is the local cautionary tale. When it went into receivership in 2010, commercial and residential development made up 62% of its book, 58% of the book was secured by second mortgages behind $544.4 million of debt ranking ahead, and investors faced expected losses of 75% to 90%.

How can New Zealanders invest in private credit?

There are four main routes, and the wrapper shapes your risk as much as the loans inside it.

Finance company deposits. Licensed deposit takers are the regulated successors to the debenture issuers of the 2000s. The Reserve Bank said in May 2026 that deposit growth since the compensation scheme began had let them cut rates to “only slightly above what banks are offering”, and flagged the risk that they “drop their lending standards to promote lending growth”. The best non-bank 12-month rate in mid-September 2026 was 5.70%.

Pooled funds. A mortgage fund offered to the public needs a product disclosure statement, a licensed manager and a licensed supervisor, with its assets held by the supervisor or an independent custodian. Wholesale funds skip most of that. Registered or not, a pool can stop paying out when too many investors head for the door at once: the $249 million Guardian Trust Mortgage Fund froze in July 2008 with about 3,700 investors inside. We compare the two approaches in direct mortgage investment vs pooled funds.

Peer-to-peer platforms. These spread your money across small personal and business loans. FMA licensing is optional; a licensed provider must verify borrowers, disclose repayment risk and default information, and belong to a dispute resolution scheme. Platform rates were 6.00% to 6.75% in September 2026.

Direct co-funding. You pick one loan, your name goes on its registered mortgage, and repayments reach your account without passing through a fund. It asks more of you, since you read each pack and spread your money yourself, but nothing stands between you and the security.

What returns does private credit pay in New Zealand?

Late September 2026 gives a useful snapshot. Read each figure alongside the risk behind it.

How can a loan pay 12% or more without the borrower being a poor risk? A business owner with equity in property who needs NZ$600,000 before the end of the month, to settle a purchase or cover a tax bill while debtors pay up, will pay for a decision within hours and settlement that can happen within days. Because terms typically run 1 to 12 months, the premium is paid over a brief period and capital comes back quickly. The University of Auckland’s 12% to 13% figure for alternative business finance shows the market these rates come from.

The wrapper matters here too. A pooled fund pays you what is left after the manager’s margin and costs, averaged across its whole book. On a co-funded loan, the rate for that specific loan is written into its pack before you commit.

Where do private credit investors lose money?

New Zealand’s losses have come from a short list of sources.

• Borrowers who can’t repay. Your defence is good security and enough equity under the loan, which the LVR measures.
• Unfinished projects. Development loans only come good once the building is finished and sold.
• Promised liquidity. A fund offering withdrawals on demand while its money is lent for longer can end up freezing.
• Out-of-date values. The REINZ house price index fell about 16% from its November 2021 peak, and Auckland and Wellington fell further. A loan sized off an old valuation has a thinner cushion than it looks.
• Hidden margins and conflicts. The FMA found Du Val had promoted a mortgage fund as having “no fees” while keeping all profits above a fixed 10% return.
• Paperwork shortcuts. In 2022 the FMA formally warned seven wholesale property firms about eligible investor certificates that didn’t meet the rules.

To score an offer against these, use our 10-question private credit test.

What has New Zealand’s own history shown?

That the same handful of mistakes keeps doing the damage. From 2006 to 2012, 51 finance companies went into receivership or liquidation or froze payments, and in 2016 RNZ reported roughly 200,000 investors still owed about $3 billion. The recurring features were heavy development exposure, related-party dealing, second mortgages ranking behind large senior debt, and debentures sold to everyday savers chasing a point or two above the bank. In 2008 pooled mortgage funds run by Guardian Trust and AXA froze as well.

The lesson is still live. Du Val Group, an Auckland developer that raised money from wholesale investors, went into statutory management in 2024, and by September 2025 RNZ reported its Mortgage Fund and Opportunity Fund investors were unlikely to benefit from recoveries. Our history of New Zealand’s finance company collapses covers each case, and shows where the cracks tend to form.

How is private credit regulated in New Zealand?

The rules follow the product, not the label.

• Public offers come under the Financial Markets Conduct Act 2013: a product disclosure statement and, for managed funds, a licensed manager and licensed supervisor.
• Wholesale offers rely on the Schedule 1 exclusions and carry lighter disclosure, though the Act’s fair dealing provisions still apply.
• Deposit takers are licensed, and their retail deposits sit inside the compensation scheme.
• Peer-to-peer platforms can opt into FMA licensing.
• Business-purpose lending is largely outside consumer credit law. MBIE says the only part of the Credit Contracts and Consumer Finance Act that applies to business or investment lending is the protection against oppressive behaviour by lenders. Since 1 July 2026 the FMA, rather than the Commerce Commission, has regulated the CCCFA.

Who can invest in wholesale private credit in New Zealand?

Offers such as direct co-funding are open only to people who fit a wholesale category in Schedule 1 of the Financial Markets Conduct Act. For most individuals that means the eligible investor route. You certify in writing that your previous experience acquiring or disposing of financial products lets you assess the merits of the offer, your own information needs and the adequacy of the information provided, and you set out your grounds. A financial adviser, qualified statutory accountant or lawyer then confirms the certificate in writing, and it is valid for two years. In September 2025 the High Court, answering questions put to it by the FMA, clarified what a valid certificate needs.

There are other doors. The investment activity test covers people who have held a portfolio of specified financial products worth at least $1 million, or transacted at least $1 million of them, in the last two years. The large test covers entities with net assets or turnover above $5 million in each of their last two financial years. Most HomeSec co-funders come in as eligible investors or under the investment activity or large tests, and our wholesale investors page walks through each.

How should you compare private credit offers?

Look at the structure first and the rate second. Eight questions do most of the sorting:

1. Will you see each individual loan, or only a portfolio summary?
2. Will your name be on the registered security?
3. What share of the money is in construction, land or development?
4. Can the withdrawal promises actually be met from the loans’ maturity dates?
5. Is the manager’s own capital in the same loans as yours?
6. What rate does the borrower pay, and how much of it reaches you?
7. Are any borrowers connected to the manager or its directors?
8. What is the maximum LVR, and does it count every loan ranking ahead?

Each is unpacked, with HomeSec’s own answers, in questions to ask a private credit manager.

Where does HomeSec fit?

HomeSec Business Finance, a private business lender lending since 2004, with its New Zealand office in Auckland, belongs in the last row of the routes table: co-funding individual loans secured over finished property.

Most of its loans are funded entirely from its own balance sheet. On some it offers wholesale investors a share, always keeping its own capital in the loan beside theirs.

• You pick the loan. HomeSec runs each one through a 50-point due diligence checklist, then emails you the pack. There’s no obligation to say yes.
• Your name is on the title. The mortgage registered with LINZ (or the caveat, where that is the security) records you for the amount you put in, next to HomeSec.
• The lending is plain. Business loans of up to NZ$1 million, usually running 1 to 12 months, secured by first or second mortgages over New Zealand homes and commercial buildings. No construction, no development.
• The buffer is set. LVRs top out at 80% on residential property and sit lower on commercial.
• Money comes straight back. Interest and principal land in your own bank account.
• The rate is known upfront. 12% to 18% p.a., fixed loan by loan and shown in the pack.
• You can leave early. Ask, and HomeSec will buy your share and repay your principal. With no pool, there is nothing to freeze.

It isn’t for everyone. Co-funding is for wholesale investors only, contributions start at NZ$100,000 per loan, and you build diversification one loan at a time. Borrowers do sometimes default, which is why the equity under each loan and the Property Law Act 2007 mortgagee sale process matter. What the model offers is the chance to check every answer on the list above yourself.

So is private credit worth a place in a New Zealand portfolio?

It can be, as income well above bank rates, provided the risks aren’t invisible until a fund stops redemptions. It comes down to four checks: what the loans are secured by, whether any development is involved, whether the exit terms match the loan terms, and whether you can verify what you own.

To see what a single secured loan looks like next to the fund statements you receive now, register your interest. Our Funding Manager is available seven days on 09 888 6550.