Feature article
The great bank switch
Why record numbers of Kiwi are chasing cash-backs
As we move through spring, the housing market continues to present a complex picture. While there's always a lot to keep an eye on, a couple of key factors are currently demanding attention. To understand these dynamics better, we turned to Kelvin Davidson, Chief Property Economist at Cotality, for his expert analysis.
As Kelvin notes, two things are standing out right now: the critical decisions facing borrowers and the delicate balance between property sales and new listings.
The borrower's dilemma: to fix or to float?
The first major point of focus is the tough choice borrowers face regarding interest rates. We appear to be approaching the bottom of the interest rate cycle, but we aren't quite there yet.
Kelvin explains this creates a "delicate choice for people," forcing them to decide whether to "lock in some debt for a 2 or 3 year period and get certainty," or to "stay floating or short-term fixed, and try to re-fix again shortly at the absolute bottom of the cycle."
So, what's the right move? As Kelvin wisely points out, "Ultimately, that’s a decision for each individual, and you only ever know the optimal strategy in hindsight." He does note, however, that current data suggests many borrowers are hedging their bets and doing a bit of both.
The great bank switcheroo
On top of choosing a rate strategy, borrowers are increasingly deciding which bank to go with. According to Kelvin, "Both June and July have set new records for the number of existing borrowers shifting to a new lender, with generous cash-backs on offer."
This trend is made easier by current market conditions. "In many cases, given there’s a lot of debt on either floating or short-term fixed rates, people will be able to do this at low/no cost too, in terms of break fees," he adds.
Spring listings vs. sales
The second key factor on Kelvin's mind is the relationship between sales activity and the volume of properties hitting the market this spring.
"In recent months, sales have returned to ‘normal’ levels and have started to erode the number of listings sitting on the market," Kelvin observes.
The crucial question now is whether this trend will continue through the traditional spring listing season. If sales keep outpacing new listings, buyers might find themselves with less negotiating power in the near future. As Kelvin puts it, if stock levels continue to drop, "buyers may not have it all their own way in 2026."
Outlook for 2026
Looking ahead, several factors are aligning that could support a more consistent recovery next year. Kelvin points to affordability being back to better levels, more existing borrowers set to reprice onto lower rates, and a potential drop in the unemployment rate in 2026.
Combined with tightening stock levels, Kelvin suggests that "next year could start to see more consistent property price growth re-emerge."
However, he offers an important caveat: don't expect another boom. The presence of Debt-to-Income (DTI) rules will likely act as a handbrake, ensuring that any growth remains more measured than in previous cycles.
Author
Chief Property Economist, Cotality - cotality.com
Kelvin joined Cotality (previously CoreLogic) in March 2018. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.
In his role with Cotality, Kelvin’s focus is on keeping up to date with what’s going on in the property market and continually finding different ways for viewing and interpreting it. Kelvin’s economics background means that he knows his way around a spreadsheet, but more importantly he always puts more emphasis on providing the key insights and telling a story.
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