Mortgage market sees renewed caution as buyers react to global shifts
The latest national survey of 52 mortgage advisers showed a shift in momentum across the residential lending landscape.
While buyer interest remains, emerging global uncertainties and operational delays at the banks are slowing activity and encouraging a more cautious approach from borrowers, according to the mortgages.co.nz & Tony Alexander Mortgage Advisers Survey for April.
According to responses, three key trends have emerged:
- Longer credit application processing times
- Growing buyer hesitation amid international uncertainty
- A sharp pivot to two-year fixed loan terms
First-home buyer activity dips as confidence wavers
Adviser feedback revealed a drop in first-home buyer activity.
The net proportion of advisers seeing more first-home buyers fell from 49% to 21%, the lowest since July last year—just before the Reserve Bank signalled it would begin cutting interest rates.
While demand for loans remains healthy, comments suggest economic caution is beginning to weigh on decisions. Still, some lending conditions have eased, helping new buyers get across the line.
Notable adviser insights include:
- “Properties that previously might have not been taken as security are starting to be accepted.”
- “Lower test rates, low equity premiums being removed – helping get the numbers up.”
- “Some banks now allow us to use two boarder income for high LVR which is a big change.”
Investor activity stalls despite easing criteria
Investor demand continues to trail behind that of first-home buyers.
Only a net 2% of advisers reported more investor enquiries, among the weakest results since August 2023.
The hesitancy, advisers said, stemmed from concerns around interest rates and international developments. However, banks and non-bank lenders are beginning to open doors more widely to investors, especially for new builds.
Advisers noted:
- “Test rates are dropping, and easing of criteria… no longer double-counting rates and insurance.”
- “One major bank has opened up approvals for investors to 90% LVR for new builds.”
Banks more willing to lend, but processing delays grow
A net 21% of advisers reported improved lending willingness from banks. This continues a steady trend seen since early 2023.
But advisers also expressed frustration with longer processing times, citing under-resourcing and a perceived push toward direct bank applications over broker-facilitated loans.
According to the Finance and Mortgage Advisers Association of New Zealand (FAMNZ), delays exceeding 10 working days are impacting advisers’ mental health and leading buyers to bypass advisers and go directly to banks.
Two-year fixed rates surge in popularity
Borrowers are increasingly locking in two-year fixed mortgage terms. Just two months ago, only 4% of advisers reported this as the preferred option. Today, that figure has leapt to 77%, fuelled by the emergence of competitive 4.99% two-year fixed offers.
This shift reflects growing expectations of near-term rate cuts and a desire for short-term stability in uncertain conditions.
Refinancing requests remain firm
While down from last month’s peak, refinancing interest remains relatively strong. A net 27% of advisers reported more refinancing enquiries, down from 53% previously.
As this measure is historically volatile, it’s too early to determine whether refinancing demand is genuinely declining, Alexander said.
Outlook: A cautious but adaptive market
Despite improved access to credit and easing lending conditions, buyer sentiment has cooled somewhat.
Uncertainty over global developments and bank service bottlenecks are creating a more tentative mood. Still, with interest rates likely to fall in the coming months, borrowers continue to adapt—favouring flexibility, shorter terms, and new opportunities where available.
Access the mortgages.co.nz & Tony Alexander Mortgage Advisers Survey – April 2025 for more details.
