Homeowners shop around to save
A new survey is backing anecdotal evidence that homeowners are playing musical chairs with their banks.
Research from Horizon indicates householders are prepared to take advantage of a competitive mortgage market and historically low interest rates to make sure they get the best deal.
The survey results come as refinancing applications soar, even though the overall size of the home loan market remains relatively stagnant.
The Horizon poll shows 44 per cent of mortgage holders intend to shop around at some point over the next 12 months.
Once they do start looking to refinance, less than a quarter of respondents said they would approach their own providers first.
Meanwhile Reserve Bank statistics reveal a flood of new home loan approvals, peaking at just under 8,000 per week at the end of June.
This compares with 5,446 a week at the same time last year.
These figures contrast sharply with the state of the banks' home loan books, which have grown just 1.5 per cent in the same period.
Banks are approving roughly $900m worth of new loans each week, yet adding only $10.7m to their collective loan books - an indicator of the level of switching between banks.
While many new approvals are accounted for by duplication and natural buying and selling activity, the majority relate to refinancing existing loans.
An insider suggested to BusinessDay that at least one bank focused solely on poaching other bank's customers while making little attempt to attract new ones.
The cut-throat competition among lenders has resulted in under-the-table interest rate discounts of half a per cent or more, and offers to subsidise break fees and legal costs.
National Bank, for example, is currently offering $1,000 cash and up to $1,000 towards legal costs for customers who come aboard, and TSB has a similar deal running.
The Horizon research was based on a poll of 1165 residential home owners across the country, and conducted within the last fortnight.
Bank of New Zealand chief operating officer retail, Glenn Patrick, acknowledged the intense competition.
''You are seeing customers shopping around to see if they can get a better deal than they're currently on.''
A number of the banks probably hadn't grown their home loan market share to the extent they would like, and were offering a competitive suite of products to attract and retain custom.
BNZ's initiatives included its Total Money mortgage, which lets customers use the balances in their transaction and savings accounts to reduce the amount of interest they pay.
It also offered competitive rates, free insurance, and cash back to customers who brought in more business, he said.
''The reality is you have to continue to meet the needs of the market.''
However Loan Market mortgage adviser Bruce Patten doubted how much switching was really going on.
''The volume of people moving proportional to the total market is extremely small.
''If you ask a person a question in a certain way they will say they're going to shop around. A lot of people are really just looking for advice to make sure their existing lender is giving them a good deal, and in most cases they are.''
Meanwhile Loan Market was seeing good volumes of first home buyers, who saw how much rent was costing them compared with the cost of servicing a mortgage at the current competitive rates, he said.