Cashbacks are back, criteria are easing — but your clients are still sitting on their hands
New Zealand's banks are stepping up their efforts to attract borrowers, with the latest mortgages.co.nz and Tony Alexander Mortgage Advisers Survey — drawing on 59 responses from advisers nationwide — finding a notable lift in lender willingness to advance funds.
The net proportion of advisers reporting increased lender appetite jumped to 29% in June, up from near zero for the previous two months. For brokers, the shift creates a genuine opportunity — cashback offers are back, high-LVR criteria have eased, and lenders are actively competing for the business.
The shift appears to reflect banks' own business pressures rather than a broader market recovery. The survey notes the result "likely reflects an awareness by banks that lending targets may be hard to achieve over the coming year because of the shock from the US attacks in the Middle East."
In practical terms, this has translated into strengthened cashback offers, willingness to consider high-LVR pre-approvals, lower uncommitted monthly income thresholds, and revised treatment of non-standard income sources such as maternity leave — all improvements to criteria with no negative impacts to borrowers, according to advisers.
Refinancing enquiries have also picked up, with the net proportion of advisers reporting increased activity recovering to 12% from -7% the previous month. Advisers attribute this more to the return of attractive cashback offers than to any underlying lift in market activity.
First-home buyers approved but not committing
Despite banks' more accommodating stance, demand from first-home buyers remains soft. A net 14% of advisers reported seeing fewer first-home buyers in June — little changed from 16% the previous month and a dramatic turnaround from February, when a net 33% were seeing more young buyers entering the market.
The picture emerging from adviser comments is of a cohort that is prepared but hesitant.
"Buyers approved and ready to go but not committing to a purchase is frequent at present," one adviser noted. "Rates sliding upwards will only extend this gap."
The overall mood, as Alexander (pictured) summarises it, is one where caution still prevails — with many young buyers watching mortgage rates and offshore economic developments closely before committing to a purchase.
That hesitation has a policy anchor. The RBNZ has signalled it expects to lift the OCR during 2026, forecasting inflation to peak at 4.3% in the September quarter. The next OCR decision is due 8 July.
Investors selective, borrowers locking in two years
Investor interest has improved from April's low point — when a net 49% of advisers reported fewer investors — but remains firmly in negative territory, with a net 29% of advisers reporting fewer investors in June. Advisers note that active investors are increasingly focused on yield improvement through renovation or adding to existing properties rather than acquiring new ones.
Away from investors, the picture for owner-occupiers is more decisive. Over 74% of advisers report borrowers are favouring two-year fixes, while interest in shorter terms has collapsed since mortgage rates began rising — with just 6% of advisers noting any preference for three-year fixing.
The rate context makes the preference understandable. The two-year rate climbed to 5.69% in May — part of a broad upward trend across all fixed terms since January, with the one-year rate at 5.26% and the five-year rate reaching 6.24% (standard advertised rates, excluding specials).
For brokers, the implication is clear — clients want flexibility, and the two-year term is currently the market's best available expression of it.
Read the full Mortgage Advisers Survey for more information.
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