Borrowers locking in longer terms
One of the sharpest shifts has been in fixed-term preferences. As recently as November 2025, fewer than 20% of new loans were fixed beyond 12 months; that figure has since jumped to the mid-50s% over the past five months, with two-year fixes proving especially popular, as borrowers guard against further rate rises.
Refinancing activity also remains elevated: June’s $2.3 billion refinancing figure was the highest monthly total since July last year and the fourth-highest on record since 2017, excluding a December switching bonanza when all major banks offered 1.5% cashback, as borrowers continue chasing incentives despite muted overall lending growth.
The stock of outstanding mortgage debt has also passed $400 billion for the first time, up from $300 billion as recently as December 2020. Against Cotality’s estimate of New Zealand’s total housing stock value of almost $1.7 trillion, aggregate mortgage debt remains low, leaving high “paper equity” across the market. But for the estimated one-third of households carrying that debt, Cotality notes “the swings and roundabouts of mortgage rates and credit policy are more acute.”
Looking ahead, Cotality expects new lending activity to remain in a slowdown if interest rates come under renewed upward pressure in the months ahead. Even so, with repayment stress at a low base, first-home buyers are likely to remain, in Cotality’s words, “a fruitful group for lenders,” while banks focus on retaining existing borrowers at refix time even as they compete for new market share.
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