A record number of New Zealand mortgage holders changed lenders in June, with more than 3500 borrowers refinancing their loans worth a total of $2.5 billion in lending.
Short-term loan structures, minimal break fees, and competitive cashback offers drove the refinancing surge, which was the largest since the Reserve Bank began tracking the data in 2017.
Cotality NZ chief property economist Kelvin Davidson said the elevated level of switching likely reflected that borrowers were actively monitoring rates and terms.
“With nearly 14% of mortgages on floating rates and another 39% fixed and due to roll off by the end of 2025, a large number of borrowers are in a position to switch lenders without large break fees. This dynamic may continue to support elevated levels of refinancing activity in the near term.”
New mortgage lending activity, which covers house purchases, loan top-ups, and bank switches, reached $8.3 billion in June this year, up $2.6 billion from the same month last year.
Davidson said it should be noted that June 2024 was a “one-off soft month”.
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First home buyers, investors, and owner-occupiers all contributed to the upswing.
Loan-to-value ratio limits were still not really being tested, Davidson said. “12.1% of lending in June was done with a deposit less than 20% – but this type of lending remains popular with FHBs. They still account for 75-80% of all low-deposit owner-occupier activity.”
Nearly half of all first home buyers entered with a less than 20% deposit.
Interest-only lending remained below historical peaks, with 15% of owner-occupiers and 35% of investors opting for that structure, down from 30% and 50% apiece in 2018.
There was no strong indication interest-only lending was being used to manage financial stress as was observed during Covid.
High debt-to-income (DTI) lending is gradually increasing. In June, 10.2% of investor loans had a DTI above 7, and 7.5% of first-home-buyer loans exceeded a DTI of 6. Both remain well below the 20% regulatory speed limits.
Sales volumes have returned to typical levels, and stock on the market is edging lower, partly due to vendor withdrawals. National median house prices rose 0.6% in the first half of 2025, with a further 1–2% increase expected in the second half.
Falling interest rates may influence borrower behaviour, Davidson said.
“As loans mature, borrowers will need to decide not only what term to refix on, but also what to do with their ‘cash windfall’ from lower repayments. Some may use that capacity to reduce the length of their mortgage (by keeping repayments the same), while others may save it, thereby reducing the pass-through to economic activity.”
A small group of borrowers remained on ultra-low five-year fixed rates of around 3%, set during the mid-2021 trough, he added.
“While they’ll eventually face higher repayments, the benefits they’ve already seen have been significant in the past few years.”
