03/08/2026
The 3-year mortgage merry-go-round nobody explains to you
When you take out a home loan in New Zealand, the bank hands you cash up front. Usually somewhere around 0.7% to 0.9% of what you borrow. On an $800k loan, that’s roughly $6,000 to $7,000 landing in your account.
Nice. But read the fine print.
That money is contracted, almost always for three years. Leave early and you pay some or all of it back, depending on the bank.
So here’s what happens across the whole market.
Every three years, a huge chunk of NZ borrowers come “free” again. And every bank goes hunting for them with another cash offer.
Think about what that does to competition.
Banks don’t have to fight nearly as hard on the things that actually matter over the life of a loan: the rate, the policy, the product. The cash contribution does the heavy lifting at the point of sale. It’s a shiny thing at the front door that lets margins sit comfortably out the back.
Nobody is saying this was designed that way. But that’s the effect.
What it actually means for you
At Float, we don’t look at the advertised rate. We look at the all-up rate, which is the interest rate plus the cash the bank puts on the table, spread across the term you’re locked in for.
$800k at 0.9% cash equals $7,200. Across three years, that’s the equivalent of knocking roughly 0.3% p.a. off your interest rate. Now add the sharper pricing banks reserve for new customers, versus the rate they roll existing customers onto at the end of a fixed term, and the gap gets wider again.
Sit still in year four and that’s what you’re walking away from. It isn’t a fee you pay. It’s savings you simply never collect, every year, on the biggest debt you’ll ever carry.
And the awkward part... Banks don’t love advisers reviewing clients every three years. We understand why. But our obligation isn’t to a bank’s retention numbers. It’s to the people we work for. And if the goal is to pay less interest, the honest answer in this market is that your loan needs a proper review every single time that contribution term rolls off.
Staying put isn’t loyalty. Nobody’s rewarding you for it.
