Mortgage advisers across New Zealand say the introduction of 1.5% cashback offers has triggered a sharp rise in refinancing activity, leading to longer processing times and operational pressure at lenders.
The latest mortgages.co.nz and Tony Alexander Mortgage Advisers Survey for December 2025, based on responses from 51 advisers, highlights widespread frustration with delays as borrowers switch banks to secure cashback incentives.
Advisers report that demand from first home buyers remains solid, although lower than last month, with a net 31% saying they are seeing more first-time buyers seeking advice.
This compares with 55% in November but is consistent with October’s result, reinforcing that younger buyers continue to play an active role in the residential market.
Several advisers noted that while live deals are progressing, pre-approvals have become harder, with some banks temporarily pausing pre-approvals due to Christmas backlogs and refinancing demand.
Investor interest remains present but subdued. A net 22% of advisers reported seeing more investors in December, down from 31% in November but higher than October’s 14%.
Advisers described criteria as broadly stable, although cashback-driven refinancing has complicated processes, particularly where break costs and tight documentation timelines are involved.
Some banks have shown greater flexibility, including easing deposit requirements in limited circumstances, while others have restricted lending to manage volumes.
The survey shows lenders remain broadly willing to advance funds, with a net 39% of advisers saying lending appetite has increased.
This is consistent with recent months and indicates credit availability remains supportive, despite delays caused by the refinancing surge.
Advisers said the operational strain is temporary but notable, driven almost entirely by cashback-led switching rather than new purchase demand.
Borrower preferences for fixing mortgage rates have also shifted. Advisers reported a clear move away from one-year fixed terms towards two- and three-year periods, reflecting expectations that interest rates may rise following the Reserve Bank’s more hawkish-than-expected decision on 26 November.
The proportion of advisers citing one-year fixes as the preferred option fell from 60% to 15%, while two-year preferences rose to 33% and three-year to 19%.
Refinancing enquiries reached a record high in December, with a net 76% of advisers saying more borrowers are asking about refinancing, up sharply from 24% last month.
Advisers attributed the surge almost entirely to the advertising of 1.5% cashback offers, which have prompted borrowers to reassess existing loans despite the administrative burden involved.