Cashback crop heats up as house prices stall
New Reserve Bank figures reveal a refinancing boom that Kiwi mortgage advisers cannot ignore.
In December, home loan lending climbed to $14.1 billion, about $3.6 billion above the previous record set in March 2021, with a large share driven by borrowers refinancing rather than new purchases.
Reserve Bank data shows $5.8 billion in home loan lending was refinanced in December, more than double the previous high. Switches made up 41% of the total movement of lending, versus the earlier record of 30% in June. Cotality chief property economist Kelvin Davidson (pictured left) described it as a “large spike” in activity and a story of “huge gross churn”, RNZ reported.
The figures land as Cotality NZ’s latest Home Value Index shows national property values are now 1% lower than a year ago and still sitting 17.5% below the early‑2022 peak of $972,743.
Cashback arms race rewards the most mobile
Davidson said the December surge was “all driven by increased ‘cashback’ activity” as banks dangled incentives equivalent to a slice of the loan balance.
“Remember that the banks were all offering 1.5% cash for lending for a period of time in November, which then fed into December's strength once the loans had actually been drawn down.”
On the ground, advisers are feeling the pressure too: the latest mortgages.co.nz & Tony Alexander survey reports a ‘manic’ year-end rush as 1.5% cashbacks clog bank pipelines and blow out turnaround times.
Borrowers with larger incomes and bigger loans appear to be leading the charge, with the share of high DTI lending actually dropping. For example, “in relation to investment collateral, high DTI loans fell from nearly 17% of the total in November before exemptions to around 12% in December,” RNZ said. That suggests banks are aggressively competing for relatively stronger profiles, leaving more leveraged households behind.
Winners, losers, and the ‘pass the parcel’ risk
For advisers, the key challenge is that not every client can play the cashback game.
Squirrel chief executive David Cunningham (pictured right) warned that borrowers tied to fixed terms or recent cashbacks may face break fees or clawbacks: “What you end up with is your new customers get their 1.5% cashback, but existing customers go well, hold on, why are they getting this deal?”
Cunningham argued “cash backs have become the new battleground”, replacing sharper front‑book pricing.
Banking expert Claire Matthews, however, believes interest rates still matter deeply and that borrowers “can negotiate with their bank for a better deal” even without cashback.
For Kiwi mortgage advisers, the takeaway is clear: understand each bank’s cashback rules, calculate the net gain after fees and clawbacks, and be ready to explain why staying put – or moving – makes sense in a cooling, cashback‑driven market.
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