Kiwi businesses are growing despondent — and the mortgage market is feeling it
A fresh wave of pessimism has settled over New Zealand businesses, with the Middle East conflict, rising input costs, and election-year uncertainty combining to dampen confidence that had only recently shown signs of recovery.
That is the headline finding from independent economist Tony Alexander's May 2026 survey for MintHC, which drew responses from 376 businesses across more than 30 sectors.
The three dominant concerns among surveyed businesses were the general economic outlook, customer demand, and politics, in that order. Interest rate worries, which had faded through much of 2025, have quietly crept back up the rankings over the past few months.
Alexander also flagged "an increasingly apparent disconnect between the rising number of consents being issued for new dwellings and actual work being arranged on the ground" — a concern with direct implications for pre-approval confidence and settlement timelines in the residential construction pipeline.
A market that has gone backwards
The mortgage broking sector's own respondents were blunt.
"Just a general quietness in the market," one adviser said. "Uncertainty around the OCR and interest rates."
Another was starker still: "The market has gone backwards."
Those comments align with broader data in the survey showing customer demand concerns near their highest levels since the tracker began in March 2023. The brief optimism that characterised the end of 2025 — when revenue expectations spiked — has unwound.
A net 21% of businesses now expect better revenue over the coming 12 months, up from 10% in April, but Alexander cautioned that "pulling back from the brink however is not the same as trending improvement."
That broader reluctance to invest runs deeper than sentiment alone, and predates the current shock. A Chartered Accountants ANZ survey of nearly 700 finance professionals found 68% of businesses are already feeling the direct economic effects of the Middle East conflict, with eight in ten reporting increased costs. That pattern is not new — a separate NZIER Insight found NZ businesses have steadily shifted towards liquid assets over the past decade, with current assets rising from 27% to 31% of total assets between 2018 and 2024, a trend researchers warn could weigh on productivity and wage growth if it persists.
Labour shortages loom as a future risk
Despite the weakening economy, finding suitable staff remains harder than conditions alone would suggest. A net 16% of businesses reported difficulty sourcing the people they need in May, up from 10% in April.
Alexander warned that when demand eventually recovers, labour shortages "of intense and growth-restricting nature may emerge quite quickly — perhaps over 2027-28."
For now, the dominant mood across sectors is one of waiting — though the rate outlook is sharpening fast enough to make that posture increasingly costly. Election uncertainty, geopolitical disruption, and unresolved questions about interest rate direction are keeping decisions deferred — a combination that mortgage brokers will recognise from their own pipelines.
The rate debate is live. Most bank economists expect OCR hikes from July, with ASB forecasting the cash rate at 3.25% by December. Kiwibank disagrees — arguing the conflict is a supply shock, not an inflation problem, and that hiking now would do more harm than good.
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