Mortgage advisers report caution amid credit improvements
Mortgage advisers are reporting a more cautious tone across the home loan market, despite rate cuts and improved credit availability, according to the latest mortgages.co.nz & Tony Alexander Mortgage Advisers Survey.
The shift comes as Cotality NZ data shows standalone houses are starting to lead the market’s recovery – particularly in lower-cost suburbs – while townhouses and flats continue to lag. The suburb-level trends suggest the downturn may be easing, though uneven affordability and tight lending rules are expected to keep conditions volatile into 2025.
First-home buyer activity edges higher
A net 15% of mortgage advisers said they were seeing more enquiries from first-home buyers in June, up from just 4% in May.
However, Tony Alexander (pictured) noted the recovery remains weak compared to earlier in 2025.
“The pace of entry into the market by new buyers eased off in April despite continuing declines in interest rates,” Alexander said.
Advisers highlighted stricter lending conditions for borrowers with less than a 20% deposit.
“Tougher with banks now telling us they are pushing their over 80% LVR limits. Wonder if it’s more about their inability to manage their lending queues,” one broker said.
Another added, “Servicing requirements for lending over 80% is also tightening again with several banks.”
Investor interest lifts slightly
Investor enquiries also rose modestly, with a net 10% of advisers observing more activity – up from 5% in May and 2% in April.
“Lenders seem fairly bullish about investors which is a pleasant change from a year or more ago,” one adviser said.
Others pointed to long lead times and cautious strategies: “Many investors are seeking cashflow positive properties so the timeline from preapproval to purchase is longer for this reason.”
Lenders still slow despite easing test rates
Lenders’ willingness to advance funds held steady, with a net 13% of advisers saying conditions were more favourable – unchanged from May.
“Super busy…. the banks really don't have urgency from application through to documentation,” one said.
Another reported, “Worst assessment times out of AKL I have seen in 13 years.”
While test rates have declined in line with the OCR, competition among lenders appears limited.
“Banks still content to do their own thing, and not too interested in matching competition,” one broker said.
Borrowers lean toward short-term fixes
Short-term interest rate fixes remain the preferred option, with 38% of borrowers choosing a one-year term and 27% selecting 18 months.
Only 8% were fixing for three years.
“There is a definite shift away from very short-term rates. A few are hedging their bets with a one- and three-year rate,” one adviser said.
Refinancing remains a key trend
Refinancing activity remains strong, with a net 29% of advisers reporting more enquiries.
“More and more existing borrowers are requesting retention payments which can then trigger a refinance,” one broker said.
Outlook: Cautious optimism but winter slowdown
Many advisers flagged cautious optimism among buyers but acknowledged winter has brought a slowdown in new activity.
“Winter slowdown is apparent. Busier than last winter though,” one adviser said. Another added, “Still plenty of first home buyers out there looking.”
Non-bank lenders were noted as increasingly competitive, while processing delays continued to drive borrowers to switch banks.
“Many clients are getting declined by their own bank for a top-up, but another bank will refinance them with the extra funds included,” an adviser said.
