February update | Banks hungry, OCR on hold
It’s fair to say it’s been a pretty unsettling few weeks weather wise, which is never ideal for builders, developers, or anyone trying to get construction projects moving.
Our thoughts are with those who’ve been affected by the recent flooding events. Hopefully this week’s weather gets people back out and about again and some momentum returns.
Here’s the latest update on the property market, lending conditions and interest rates.
Banks are hungry for your lending
One clear theme at the moment is that banks are very keen for business.
Refinance activity has slowed a bit after the pre-Christmas rush, where many borrowers locked in cashback offers and sharper rates. One thing I've noticed in recent months is a noticeable lift in upsizer enquiries.
A lot of first home buyers who purchased five or six years ago now have growing families and are starting to outgrow their homes. That has clear flow on implications for builders and developers. The market needs a good mix of typologies, smaller homes, family homes, terraces, townhouses, and standalone options, to suit Auckland’s varied demographics.
Credit criteria quietly easing
Over the past few weeks, we’ve also seen banks gradually loosen credit settings at the margins.
Without naming names, some lenders have relaxed how they assess variable income such as overtime, bonuses, and commission. In some cases, regular overtime that was previously shaded is now being taken at 100 percent. That’s a sign of a more competitive lending environment, with banks looking to win back market share.
Banks are also taking some comfort from the view that house prices are likely near the bottom of the cycle, with modest price growth forecast from here. With the DTI framework introduced by the Reserve Bank in 2024 now firmly in place, lenders have a clearer risk backstop, which is giving them more confidence to lean into lending where servicing genuinely stacks up
OCR update – straight bat from the RBNZ
The Reserve Bank held the Official Cash Rate at 2.25 percent last week, which was widely expected.
The key message was that monetary policy will remain supportive for some time, but the door to further cuts has effectively been closed. If anything, the next move is more likely up, rather than down, although not for a while yet.
The RBNZ sees the economy in the early stages of recovery, with growth gradually broadening across sectors including construction and manufacturing. Inflation has been a touch higher recently, driven mainly by food, electricity, and council rates, but the Bank expects it to fall back inside the target range over the next few months and trend towards 2 percent over the next year.
House prices remain subdued for now, which is keeping household spending cautious. However, as the labour market stabilises and the impact of earlier OCR cuts continues to work through, the RBNZ expects consumption and activity to lift gradually through 2026.
So what does that mean for property owners and buyers?
Mortgage rates are unlikely to fall much further from here
The OCR is expected to stay put for a while
Any future increases are likely to be gradual, not sudden
A more stable interest rate environment should support confidence over time
What we’ve been up to this month
It was great to meet with The Private Sale Company last week. Selling privately isn’t for everyone, but for those who want to have a crack at selling their own home, they provide solid guidance and support through the process. As with finance, there’s no one-size-fits-all approach when it comes to selling, and having choice is a great thing for homeowners.
Looking to buy your first home, or know someone that is?
I’d highly recommend coming along to Fletcher Living’s First Home Buyers Event on 5 March at Waiata Shores. You’ll be able to talk directly with the Fletcher Living team about homes at Waiata Shores and Park Green, two excellent master planned communities with a real neighbourhood feel, cafes, supermarkets, and amenities close by, and homes across a range of budgets.
I’ll be there talking through the ins and outs of financing your first home and answering questions on KiwiSaver, deposits, lending rules, and common traps to avoid.
If you’re coming along, you might also find it helpful to download our comprehensive First Home Buyers Guide beforehand.
TurnKey Pro is moving housing projects along
We’re continuing to support builders and developers through TurnKey Pro, our dedicated turnkey funding solution. It’s designed to be one of the most cost effective turnkey funding options in the market and is currently helping builders scale and deliver new homes from Invercargill right through to Whangārei.
If you’re a builder or developer thinking about spec builds or turnkey projects in 2026, I’m always happy to talk through how it works and where it can fit.
As always, feel free to get in touch if you want to chat about your own lending, a project you’re considering, or a client you’d like me to help.