Mortgage holders drive confidence rebound as rates fall
New Zealanders are feeling more optimistic heading into summer, with the ANZ–Roy Morgan Consumer Confidence Index rising 6 points to 98.4 in November – its highest level since June.
The result comes shortly after RBNZ delivered a 25-basis-point cut, taking the OCR to 2.25% and easing pressure on mortgage holders heading into 2026.
ANZ chief economist Sharon Zollner said the improvement is meaningful, even if confidence has not yet broken out of recent ranges.
A key driver is easing interest rates. “The drop in interest rates has not gone unnoticed,” Zollner said, noting a clear rebound in sentiment among mortgage holders.
Business sentiment is strengthening too, with ANZ confidence lifting from 58 to 67 in November, its highest level in over a decade, supported by improving firm activity.
Future expectations surge, but current pressures remain
Forward-looking sentiment showed the strongest improvement.
• The future conditions index jumped from 97.0 to 106.8 – the highest in a year.
• The current conditions index was little changed at 86.0, reflecting ongoing household pressure.
Perceptions of current financial conditions weakened, with respondents saying they are worse off than a year ago falling to –19%. However, a net 21% expect to be better off next year, the strongest result since April.
Spending confidence still weak but improving
Consumer willingness to spend is still tentative. The share of households saying it is a good time to buy a major household item rose 5 points but remains negative at –9 – a level that has persisted for more than four years.
Zollner said caution is still evident, “though our card spending data is trending higher” and showing growth across a broad range of discretionary categories.
Mortgage holders, who saw the sharpest confidence drop during the 2024 recession, are now driving the improvement.
Economic outlook expectations lift, along with inflation concerns
Views on the economic outlook for the coming year improved, rising 13 points to –9%, the strongest level in 2025 (though still negative). The five-year outlook rose to +9%.
House price expectations climbed from 3.1% to 3.8% – the highest this year – although Wellington continues to lag at 2.7%.
Inflation expectations nudged up from 5.1% to 5.2%, continuing a pattern where higher inflation expectations tend to correlate with weaker confidence. Two-year-ahead CPI expectations remain elevated relative to actual CPI inflation of 3%.
Recovery signs building across households and retailers
Zollner said the November results align with broader signs of stabilisation.
“It’s good to see a decent lift in consumer confidence this month, though it is yet to break out of recent ranges,” the ANZ economist said.
While still early in the economic recovery, several trends are encouraging:
• consumer arrears have been declining
• employment has returned to modest growth
• retailers are reporting improved activity
• overall spending remains subdued compared to the COVID boom, but is strengthening
Zollner said the past two years of adjustment are starting to pay off.
“The slowdown has achieved more than just bringing CPI inflation down – household debt relative to incomes is now back where it was before the housing bubble," she said. "Now we’ve taken our medicine, the stars are aligning for better times ahead.”
For more insights, access the ANZ-Roy Morgan report.
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