New Zealanders refinanced their mortgages in record numbers at the end of 2025, driven largely by generous cashback incentives rather than interest rates alone.
In a guest column for Trade Me, Cotality Chief Property Economist Kelvin Davidson revealed that December was a record-breaking month for mortgage borrowing. Kiwis committed to $14.1 billion of new loans – $3.6 billion more than the previous record set in March 2021.
Of that total, $5.8 billion was refinancing activity, more than double the previous high of $2.6 billion recorded in July 2025.
Cashbacks take centre stage
While some borrowers were seeking sharper interest rates, Mr Davidson said cashback offers were the main attraction. “The bulk were probably seeking a cashback – which were ramped up to 1.5% of the loan value by all of the main banks in November, feeding into December data when the loans were actually drawn down.”
Importantly, the data suggests the surge was not reckless. The share of lending done at high debt-to-income levels fell in December. “The switching was done to some extent by ‘safe’ borrowers rationally looking to take advantage of the situation and secure some extra cash,” Mr Davidson said.
Since then, several lenders have scaled back their most generous offers. “Even so, a smaller cash-back than was on offer in November could still be attractive. And with a lot of debt sitting on a floating rate or a fixed rate due to expire shortly, there’s probably still a bit more switching activity in the pipeline,” Mr Davidson said.
Should you refinance for a cashback?
Cashbacks can be valuable – particularly on larger loans – but they are not free money. Most banks require borrowers to stay for a minimum period, or the cashback must be repaid. There can also be legal fees, valuation costs and potential break fees to consider.
Mr Davidson cautioned that chasing the lowest rate can be risky, as that bank may not have the lowest rates over the long term. In other words, switching needs to be done prudently and with a view to your broader mortgage strategy.
If you are weighing up whether a refinance or a cashback offer aligns with your current financial strategy, get in touch for a professional assessment of the numbers to see if a move provides a net benefit for your situation.
