New Zealand's $14.1B Home Loan Frenzy Sparks Mass Bank Switching in December
New Zealand's home loan market witnessed a record surge in December 2022, with borrowers switching banks at unprecedented rates. A total of $14.1 billion in lending was recorded—$3.6 billion higher than the previous peak month. The rush was largely driven by attractive cashback offers from major lenders like Wells Fargo and US Bank.
Cashback deals became the main incentive for borrowers to change banks. Some lenders, like ANZ and BNZ, offered up to 1.5% of the loan amount in cash, alongside competitive interest rates. BNZ even provided first-home buyers with at least $5,000 cashback on new loans of $250,000 or more, requiring just a 5% deposit.
The December data revealed a 'huge gross churn', with 41% of total lending activity coming from borrowers switching providers. Both owner-occupiers and investors took part, seeking better terms. However, not all borrowers could take advantage—those locked into existing loans faced potential break fees or higher costs if unable to refinance.
While cashback promotions boosted switching, banks still competed on interest rates for many customers. This meant existing borrowers did not always see lower rates, even as new deals attracted fresh business. Some lenders may have gained market share through these aggressive offers.
The record lending activity highlights how cashback deals reshaped borrowing behaviour in late 2022. Major banks like ANZ and BNZ used these incentives to draw in new customers, particularly first-home buyers. The trend also underscored the challenges for borrowers unable to switch, who missed out on potential savings.
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