Refinancing drops, investor activity rises, lending eases slightly
The July 2025 mortgages.co.nz & Tony Alexander Mortgage Advisers Survey, which gathered insights from 52 mortgage advisors nationwide, revealed that “there continues to be a slow trend of easing bank lending criteria.”
However, “mortgage application processing times are perceived as still very poor by mortgage brokers.” Buyer demand remains “weaker than usual,” with first-home buyers active but “owner-occupiers and investors far less so.”
These findings reflect the broader economic environment, where uncertainty about interest rates and inflation is shaping both borrower and lender behaviour.
First-home buyer activity remains positive but below last year’s highs
When asked if they are seeing more or fewer first-home buyers seeking advice compared to last month, a net 17% of mortgage advisors reported seeing more first-home buyers looking for some advice. This result is virtually unchanged from June’s net 15% and aligns closely with the five-year survey average of net 16%.
However, Alexander (pictured) noted, “this reading is still positive… [but] well down from advisor perceptions of first-home buyer presence between August last year and March 2025.”
Advisors shared direct feedback on lending to first home buyers:
- “Over 80% LVR lending still tricky unless it’s a ‘live deal’ and this is putting off some potential purchasers who want certainty on getting the finance before getting too emotionally attached to a property, or the expectation they can purchase a home.”
- “Banks appear to be keen to support FHB at the moment and whilst pre-approvals are not obtainable, most banks are supporting the live applications with some expediency.”
- “Most banks are live deals only for any non-bank clients, regardless of LVR. Makes providing a range of options tricky.”
Investor interest ticks up, but remains muted
Investor activity appears to be picking up modestly, with a net 21% of mortgage brokers reporting an increase in enquiries from potential property investors.
While the market remains largely dominated by younger buyers – a trend in place since early 2023 – there is renewed interest from those seeking investment opportunities.
However, overall investor demand remains softer compared to the more active period between August 2024 and March 2025.
Comments from advisors on lending to investors include:
- “With test rates having dropped over the past several months, DTIs are now more commonly popping up as a limiting factor.”
- “Some lenders have now done away with having to include Body Corp costs as a separate expense for investment properties in the debt servicing calculation.”
- “UMI is coming down with certain banks. Assessors seem to be asking a lot more questions and more supporting documentation than before.”
Lenders more willing to advance funds
The survey found that a net 13% of brokers observed banks becoming more willing to lend – marking the third consecutive month at this level. This measure has remained in positive territory since February 2023, coinciding with the young buyer-led recovery in the housing market.
Brokers mainly reported ongoing, modest easing in lending criteria, though some noted occasional tightening depending on the lender.
Most borrowers still fixing short-term
Kiwis continued to show a strong preference for short-term fixed mortgage rates, with very few opting to fix beyond three years – even during the 2020–21 period when five-year rates dropped as low as 2.99%.
The latest survey found that 33% of brokers reported borrowers are fixing for one year or less, 21% for 18 months, another 33% for two years, and just 10% for three years.
Alexander said, “the spread of rate preferences appears as a relatively normal situation and not something perhaps driven by people having a strong expectation for where interest rates might be headed.”
The survey also noted a decline in the number of borrowers opting to fix for one year – a trend that has been heading downward since the start of 2025. Meanwhile, interest in two-year fixed terms has recently tapered off after surging in popularity between March and May.
There is “a small rise underway in the proportion of people fixing their mortgage interest rate for three years,” Alexander said.
Refinancing enquiries at decade low
A net 17% of brokers reported an increase in property owners enquiring about refinancing – marking the lowest level since late 2013. This may suggest that borrowers are relatively clear on the interest rate outlook or that banks are not actively competing for refinancing business at present.
Download the full report here.
