Jobs are down and wage growth is slowing, but advisers say buyers aren't backing off
Recent figures show New Zealand’s labour market continuing to lose steam. The March 2025 quarter saw employment growth barely budging, and the unemployment rate holding at 5.1% – its highest since 2020.
Around 20,000 jobs have been lost over the past year, while wage growth has slowed to a 0.4% quarterly rise in private sector labour costs - the lowest in three years. Participation has dropped, hours worked are down and job creation has stalled. However, with inflation now within target and wage pressures easing, the Reserve Bank is expected to cut the Official Cash Rate by up to 75 basis points over 2025.
So, what does all this mean for people looking to buy property or refinance? NZ Adviser asked three mortgage advisers how their clients are reacting to the job numbers, rate moves and softer wage growth.
Buyers still showing up, but not overstretching
Despite what might seem like a gloomy labour market, all three advisers said buyer interest hasn’t dropped off – in fact, in many cases it’s picking up.
“It’s actually been quite the opposite,” said Elyce Peters, head adviser at The Mortgage Girls. “These conditions have prompted a wave of excitement, with more people eager to get back into the property market. The more balanced market has also opened opportunities for homeowners to upgrade.”
Brendan Brits, director at Loan Market Coast to Coast, agreed, but noted that clients are still being careful not to stretch their budgets too far.
“Clients are naturally restricted in their borrowing ability by the banks’ servicing criteria and DTI ratios, but clients are less likely to pay top dollar for a property and won't stretch themselves to their limits.”
Eugene Bartsaikin, director at Twine Financial Advisers, said there’s definitely more activity, though clients are proceeding with care given the rise in job instability.
“We're seeing improved lending conditions and more activity in the market, but buyers are cautious in their offers,” he said. “It’s not surprising to hear of at least one client every week saying they’re worried about restructures at work, or even taking pay cuts.”
With job losses ticking up and wages stalling, it’s natural to wonder how employment risk is affecting borrowing decisions. All the advisers said they talk to clients about job security, but none were applying rigid rules.
“While widespread job losses haven’t impacted the majority of our clients, we always have an open conversation around employment and job security,” Peters said. “We’re helping them make long-term, sustainable decisions.”
Brits took a more selective approach. “To an extent, we do factor in employment risk it’s common knowledge that a client works in a job, industry or location where significant change is underway,” he said. “We wouldn't do it from a speculative position though.”
Bartsaikin shared a specific example of how he handles long-term planning where there is a potential for reduced income.
“I talk to my clients about their plans, especially over the next year or few, and help suggest a budget,” he said. “A couple I’m working with are planning to have kids, so we based their budget on a reduced income down the track. It's about being realistic, not restrictive.”
Some feeling rate relief, while others still waiting
Lower inflation and softening interest rates are beginning to ease repayment pressure for some mortgage holders, but the advisers said the relief is uneven and often delayed.
The relief is most notable for those coming off fixed terms. But while most clients remain comfortably within borrowing limits, structural issues, like the high cost of floating rates, are slowing the impact of recent OCR cuts.
Bartsaikin said the issue of floating rate costs has been particularly noticeable for his clients. While one bank has passed the cuts onto its floating rate, Bartsaikin said that other banks still need to follow.
“Most borrowers are on short-term fixed rates, so it takes a while to feel the benefit of OCR cuts,” he said. “One major issue is the high margin on floating rates. It stops people from switching and taking advantage of lower rates. In Australia, floating rates are more common, and people feel rate cuts sooner.”
Brits noted that most of his clients aren’t borrowing right up to their limits.
“DTIs will only really start to impact borrowing now that interest rates are closer and just under 5%,” he said. “I’d expect that to change if the market heats up again, but for now it’s a slow and steady cycle.”
For Peters, dropping rates have undoubtedly been good news, and have offered up opportunities for clients to get debt-free quicker.
“Many clients whose fixed terms are coming up for review are actually feeling relief with the recent rate drops,” she says. “We’re having really proactive conversations about keeping repayments at their current level. It’s a simple shift that’s delivering powerful results.”
Overall, the sentiment is that although the job market is soft, buyers haven’t disappeared. Most are adjusting to the conditions, keeping a close eye on job security and interest rates while staying in the hunt for opportunities. And with more rate cuts likely on the way, that confidence could grow, especially if banks start passing them on more fully.
In the meantime, advisers are focused on helping clients make smart, sustainable choices – whether that means locking in rates, budgeting for future changes, or simply staying the course.
