Articles by Salesh Chand.
Over recent months we’ve seen banks offering some unusually generous cashback incentives for new lending and refinancing. While these offers were short-lived (and are discussed further below), they serve as a useful reminder that lenders remain competitive and will work hard to attract new business, or retain existing clients, particularly in a quieter lending market.
For borrowers and property investors who are aware of these incentives, there can be real opportunities to take advantage of them. Time, however, is of the essence, as such offers are often only available for a limited period.
When ANZ launched its particularly generous cashback promotion in mid-November, quickly followed by other major banks, it triggered a noticeable increase in refinancing activity. The standout feature was a cashback of up to 1.5% of the loan amount for qualifying borrowers.
Cashback incentives have been a feature of the New Zealand mortgage market for more than a decade, effectively replacing the earlier “legal contribution” model. In recent years, cashbacks have typically ranged between 0.8% and 1%. The move to 1.5% was therefore well above market norms.
To put this into context, a borrower refinancing a $1 million mortgage might previously have received around $9,000 in cashback. Under this promotion, that figure increased to approximately $15,000. For many households, that level of incentive could meaningfully contribute towards home improvements, reducing other debt, or funding the next investment step.
We saw people putting this offer to good use. Here’s a case study to illustrate:
Callum had a great mortgage broker, who not only told him about the cashback offer, he also managed to negotiate an even better deal. The bank was offering $18,000, and the broker was able to get that increased to $30,000. Callum was stoked, and used this money to pay down some of his loan.
While not quite as generous as the October-November ones, cashbacks are still on offer, and can be very worthwhile for borrowers.
We’ve seen people use the money as working capital for businesses they own, or to undertake renovations on a property. Alternatively, you could hold the funds in your bank account, providing a buffer in case the unexpected happens. I personally use cashbacks as working capital. This has the added bonus of making it easier for me to get credit.
While the abovementioned 1.5% cashback promotion has now ended, it highlights how quickly the competitive landscape can shift. It also reinforces the value of having a good mortgage broker – someone who is monitoring the market closely and can act quickly when these opportunities arise.
The way lenders compete for borrowers has evolved over time. Historically, competition centred on headline interest rates, with banks advertising standard and special rates and borrowers negotiating further discounts. Today, much of the refinancing process is managed through digital platforms and mobile banking apps.
While this has improved efficiency, it has also reduced the scope for individual negotiation. As a result, banks are increasingly relying on alternative incentives, such as cashback offers, to differentiate themselves.
Staying across these changes can be time-consuming, which is where a knowledgeable mortgage broker can add real value by identifying which offers are genuinely worth pursuing. (We’re happy to provide referrals to trusted mortgage brokers; just get in touch with us at GRA.)
Looking ahead, many clients are asking how to approach borrowing decisions, particularly in relation to fixed-term choices. As always, there are no certainties, but a few key factors are worth considering.
The Reserve Bank added complexity with its 26 November decision to reduce the Official Cash Rate by 25 basis points, following a larger 50 basis point cut in October. These moves, alongside modest easing of loan-to-value restrictions, suggest ongoing concern about economic momentum. Markets are now speculating about the potential for further cuts at the next review on 18 February 2026.
For borrowers facing upcoming loan rollovers, this creates a degree of uncertainty. Some commentators, including Tony Alexander, have suggested locking in longer-term rates, such as five-year fixes around 4.99%, as a form of insurance against future increases. Others, including Kiwibank economist Jarrod Kerr, expect rates to continue trending lower.
Unlike the post-pandemic period, when longer-term fixed rates were clearly attractive, the current environment is less clear-cut. While Reserve Bank projections indicate possible rate increases from around mid-2027, forecasts that far ahead should be treated cautiously.
A balanced approach may be appropriate, splitting borrowing across different fixed terms to manage risk, while retaining some exposure to shorter-term rates, which are often lower.
Interest rates are important, but they are only one part of the equation. The overall structure of your borrowing can be just as important, particularly for property investors.
This may involve extending loan terms to improve serviceability, using interest-only periods to manage cash flow, reviewing security arrangements with lenders and solicitors, or undertaking a broader strategy review to ensure your borrowing capacity and ownership structures align with your longer-term investment objectives.
Current indicators suggest that 2026 could present more favourable conditions for property investors than we’ve seen in recent years. Taking the time now to review and refine your mortgage structure could place you in a much stronger position when opportunities arise.
If you’d like an introduction to our recommended mortgage brokers, or would like to review your existing structures (companies, trusts, and where debt is held), please contact us at GRA. We’re happy to help ensure your arrangements are efficient, compliant, and fit for purpose.
When we started with GRA we werent certain of the benefits they could provide us. However they quickly unravelled our complex situations with multiple companies and structured our businesses so that we received maximum personal protection and minimised our tax liabilities. They have always been accurate on time thorough and available to answer our questions. Now six years after first moving to the team at GRA they have skilfully guided us to a future that looks amazing. It is with confidence we make decisions knowing our interests are protected by an outstanding group of modern forward thinking professionals. Their guidance has been invaluable and we can thoroughly recommend GRA - Dougall Love and Janice Knowles - June 2017
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