As market uncertainty lingers, advisers say confidence – not credit – is becoming the biggest hurdle for first-home buyers
First-home buyers finally have more choice and less pressure in the property market, but advisers say confidence remains one of the biggest barriers to getting deals across the line in 2026.
Because while lending conditions have eased compared to recent years, many buyers are still grappling with affordability concerns, an unstable economic climate, and the emotional weight of making what is likely the biggest financial decision of their lives.
“Buying a first home should be an exciting and fun process, and I’m seeing more buyers successfully achieve pre-approval than ever before,” says Adam Clark (pictured, top), a mortgage adviser for Squirrel in Auckland.
“But you overlay that with geopolitical instability, constant negative media, and political uncertainty, and it takes a lot right now for people to be brave enough to actually take the leap.”
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The adviser’s role - focusing on education and reassurance
For advisers, this means their role has shifted well beyond simply securing approval. Increasingly, the focus is on education, coaching, and helping buyers navigate a process that can feel overwhelming, with Clark saying his conversations are, more often than not, centred around real-world affordability and long-term comfort.
“I don’t want people looking at their first home purely as an investment – it’s a place to rest your head and is a hugely emotional decision as much as it is a financial one.
“That means helping buyers understand not only what they can borrow, but what they can actually sustain in the years ahead.”
Scott Lewis (pictured, right), director and financial adviser for Flax Financial, is seeing similar trends, saying first-home buyers are generally more informed and prepared than they were in previous years, but also less urgent in their decision-making.
“They have more time to do their research and planning, and clients are far more aware that we live in volatile times.
“As a result, my advice is about budgeting, stress-testing, and creating flexibility within loan structures and mitigating future risk, not just securing the lowest rate today.”
The affordability gap is still shaping early conversations
One of the biggest disconnects advisers are still seeing is around purchase price expectations and serviceability. Clark says many buyers arrive with unrealistic assumptions around how much they can borrow, particularly with an increasing use of online mortgage calculators that oversimplify lending capacity.
“A lot of people think if they earn $100,000 per annum, they can borrow $600,000 and that’s the end of the conversation,” he says.
“But the reality is very different once you factor in actual affordability.”
Rather than shutting clients down, Clark says he focuses on practical conversations using real numbers. He believes giving clients clear financial facts allows them to make informed decisions themselves, rather than simply being told no.
“I don’t tell clients what they should do, I give them the information so they can make the decision confidently themselves. For example if a mortgage is going to cost you $5,000 a month, how does that actually fit into your budget?”
Lewis agrees that affordability expectations still need resetting for some buyers, although he says many clients are pleasantly surprised once they go through the process properly.
“Some think they’re miles off buying, but actually they’re ready to go. They just need reassurance and guidance.”
Which is why Lewis says preparation and education remain the most effective tools for reducing delays and improving outcomes.
“We treat it as a coaching process,” he says.
“We complete a full lending analysis upfront so clients understand whether their goals are achievable and what homework needs to be done before we approach a bank.
“That often includes improving account conduct, reducing debt, and building more consistent financial habits before applications are submitted. Preparation upfront makes the entire process smoother.”
From approvals to property risk – the hidden challenges for buyers
Both advisers say discretionary spending and account conduct remain key pressure points during the application process, although lending conditions themselves have improved significantly compared to previous years. And while banks still require significant paperwork and there are restrictions around debt-to-income ratios, Clark says overall appetite to lend remains strong.
“It’s certainly easier now than it was a few years ago," he says.
Instead, Clark believes the bigger challenge is often what happens after pre-approval.
“Approval is just one step in the process. Actually finding a property and committing to it is where many buyers get stuck.
“I have had many clients extending pre-approvals repeatedly over periods stretching beyond a year while they wait for the right property or enough confidence to proceed.”
And even once buyers do find a home, Clark is increasingly helping clients navigate non-financial risks associated with property quality.
“There are a lot of properties with issues – from non-consented work, to cross-lease complications and poor compliance standards. Which is why the non-financial advice is becoming so important too.”
He recalls situations where clients nearly waived building inspections for new builds, before discovering significant problems with the property they were about to purchase.
Loan structures are shifting toward protection, not just price
Loan structuring is also becoming more tailored and more conservative. Clark says almost all first-home buyer lending is now split across multiple fixed terms to help reduce refix risk and protect household cashflow.
“I pretty much never recommend a single loan split for first-home buyers,” he says.
“Households are already stretching themselves, so we need to structure lending in a way that protects them if rates move.”
And because buyers are becoming increasingly aware of uncertainty, Lewis says most are seeking structures that give them flexibility without overexposing themselves.
“Clients are seeing all the doom and gloom in their daily news feed and want to feel protected.”
Technology is speeding up process, not replacing advice
Technology is also playing a growing role in speeding up applications and reducing administrative pressure, although both advisers stress it is supporting advice rather than replacing it.
Clark says digital document collection tools and open banking will continue improving efficiency, particularly around gathering bank statements and verifying information.
“It’s a massive help as open banking rolls through,” he says. “But the reality is some of the banking systems are still held back by legacy technology.”
Clark also warns that the use of AI-generated information online creates confusion for first-home buyers.
“People are coming in with pre-prepared ideas of what they think is possible based on AI tools, but it’s often not accurate or specific to New Zealand lending policy.”
While the mechanics of lending continue evolving, both advisers believe the adviser’s role itself is becoming more valuable. And Lewis says the first home buyers succeeding in today’s market are not necessarily the highest earners, but the best prepared.
“The adviser role is increasingly about education and guidance, not just securing the loan,” he says. “And that’s actually far more rewarding.”
