The great repricing
As mortgage lending rates slide, households are recalculating their appetite for debt. At the same time, bankers are revising lending thresholds, and the psychology of money itself is experiencing a shift.
The real story in property right now isn’ t about prices – it’ s about repricing.
The past six months have seen a decisive turn in mortgage activity. New lending has grown during 24 of the past 26 months, a run not seen since before the pandemic.
Mortgage lending data from the Reserve Bank of New Zealand( RBNZ) shows the total value of outstanding home loans has climbed to $ 385 billion, up 5.60 per cent year-on-year – the fastest pace since mid-2022.
For all the talk of moderation, these metrics suggest that borrowers are back in action.
THE QUIET ENGINE
Behind that resurgence lies a simple reality: the cost of borrowing is cheaper today than it has been.
The RBNZ’ s 50 basis point reduction to the Official Cash Rate( OCR) in October, and another 25 basis point cut expected before Christmas, has driven mortgage pricing to its lowest point in almost two years.
The fact that many lenders’ 18-month fixed rate offerings now undercut both one- and two-year terms suggests lenders believe interest rates have little further to fall – a clear signal that the market is approaching the bottom of the rate easing cycle.
For borrowers, this translates to much-welcome breathing room.
A household rolling off a high 2023 fixed rate could see repayments fall by hundreds of dollars a month, and for sellers, it means more qualified purchasers active in the market, generating greater competition for available properties.
Crucially, this renewed confidence isn’ t speculative. It’ s deliberate. Borrowers aren’ t stretching the limits of affordability they were at the previous market peak – they’ re calibrating for flexibility.
Nearly 30 per cent of new lending this year has been on floating rates, while roughly half have been fixed for six-to-12 months – indicating a deliberate shift toward flexibility.
Rather than locking in for security, borrowers are keeping their options open, indicating a belief that interest rates have further to fall and a desire to reprice quickly when they do.
Refinancing is undoubtedly a 2025 story. With short-term mortgage lending rates in favour and competitive cashback offers available from many lenders, borrowers are switching banking providers at near-record levels.
RAY WHITE NOW NEW ZEALAND | 22