Borrowers rush to fix rates for longer terms
The year is ending in a “manic” rush for New Zealand mortgage advisers as 1.5% cashback offers trigger a wave of refinancing, clogging bank pipelines and stretching turnaround times, the latest mortgages.co.nz & Tony Alexander Mortgage Advisers Survey shows.
The December 2025 survey drew 51 responses from advisers around the country. It finds strong refinancing activity, continued demand from first-home buyers, “mild” investor interest, and a sharp shift away from one-year fixed terms following the Reserve Bank’s hawkish November decision.
With the OCR now at 2.25% and non-banks and major lenders trimming rates, market players expect competition to intensify into 2026, with sharper pricing, fee cuts, and cashback deals all vying for borrower attention.
Cashback offers spark record refinancing surge
A net 39% of advisers say lenders are more willing to advance funds, consistent with the previous three months (31% to 49%) and pointing to generally good credit availability. But processing capacity is under heavy strain.
There has been “an exceptionally strong rise” in the net proportion of brokers reporting more refinancing enquiries – up to a record 76% from 24% last month – driven by 1.5% cashback deals “promoted with full page advertisements in newspapers”, Alexander (pictured) said.
Adviser comments highlight the pressure:
- “1.5% cash contribution has created a huge amount of work on top of an already busy Christmas build up. Lots of people refinancing and getting into a better position because of it however, which is great.”
- “Banks scrambling to regain market share with crazy cash offers but lack of ability to service the volume of work.”
- “Stupid 1.5% cashback offered at the wrong time of year – many first-home and next-home buyers trying to get finance and into new property prior to Christmas, and now bank queue times have blown out with refinancing applications."
First-home buyers still driving activity
First-home buyers remain a key source of demand. A net 31% of brokers report seeing more first-home buyers seeking advice than a month ago – down from 55% in November, but in line with October.
“The data tell us that young buyers retain a strong presence in the NZ residential real estate market, as they have done since the start of 2023.”
On bank behaviour, advisers report a mixed picture:
- “Pre-approvals are harder, live deals are OK.”
- “More lenient with servicing test rates dropping and allowing more/higher boarder income.”
- “Due to the Christmas rush, some banks have temporarily put a stop on pre-approvals.”
- “Slowly starting to be more open for new-to-bank customers.”
- “No visible difference although more cash-backs on offer and some lenders waiving low equity margins.”
Investors return, but demand remains mild
Investor interest is rebuilding from the lows of 2021–22. A net 22% of mortgage advisers say they are seeing more investors in the market – down from 31% a month ago, but up from 14% in October.
The "current levels of investor demand are mild – but at least they are there as compared with the dire situation over 2021 and 2022.”
Some banks are selectively loosening criteria:
- “One large bank has opened up to investors temporarily with less then 30% deposit.”
- “A little more flexible with deposit requirements, although not had enough interest to test it.”
- “One bank has limited funds open to a high LVR owner occupied/investment mix.”
Borrowers pivot to two- and three-year fixed terms
Rate expectations are reshaping how borrowers fix their loans. Following the Reserve Bank’s more hawkish-than-expected 26 November monetary policy decision and commentary around “no more rate cuts and instead rises coming along eventually”, advisers report a marked shift away from short-term fixes.
Preference for the one-year fixed term has “collapsed” from 60% of advisers citing it as most popular to just 15%.
In contrast:
- Two-year preference has climbed from 10% of advisers to 33%
- Three-year preference has risen from 3% to 19%
- Five-year preference has lifted from 3% to 7%, still low but edging higher
As one adviser notes, “Perspectives of what is going to happen with interest rates moving forward are fast changing from continue to lower over the next 6 months, to things may start going up soon. Clients starting to change from fixing short term to looking at long term fixing.”
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