“While we often see a lift in households’ spirits at this time of year, there is reason to expect some of that Christmas cheer will continue into 2026,” he said.
“We’re starting to see some more encouraging signs in the economy, and hopefully 2026 will be a more positive year for most New Zealand households.”
Leading the charge was the increasing numbers of borrowers rolling on to lower interest rates.
“That process will continue into the new year and will help to boost households’ disposable incomes right across the country,” Ranchhod said.
“While we have seen some upwards pressure on borrowing rates recently, most borrowers who are refixing now will still be rolling on to much lower rates.”
Ranchhod said one-year fixed mortgage rates were around 130 basis points (bps) lower than this time last year.
Two-year fixed mortgage rates had dropped by 220bps since December 2023, he said.
Ranchhod said spending appetites have also been on the rise.
The number of people who say it’s a good time to make a major purchase rose 7.1 points to -3.5, according to the survey.
“Spending remains strongest in the lower South Island. But in contrast to the past year, we’re now seeing spending picking up right across the country. That includes Auckland, which is now the most upbeat part of the country,” Ranchhod said.
Westpac senior economist Satish Ranchhod. Photo / NZME
Ranchhod acknowledged that many households across the country are still dealing with tough conditions.
“The cost of living remains a major concern, as does softness in the jobs market. Those challenges will be with us for a while yet.”
Demographically, men were optimistic for the first time this year, rising 3 points for an index score of 102.6.
Women remain pessimistic at 90.6, despite seeing an increase of 7.2 points over the December quarter.
“Close to half of women believe they are worse off financially than they were a year ago, compared with just over a third of men,” said Imogen Rendall, market research director of McDermott Miller Ltd.
Rendall said confidence amongst younger generations was “relatively buoyant” in comparison to older New Zealanders.
Confidence for those aged 18-29 lifted 14.4 points to 108.2 in the December quarter. For those aged 30-49, confidence rose 9.5 points to 101.
Those aged 50+ saw confidence increase by just 1.8 points to 90.8.
“They remain firmly pessimistic this quarter,” Rendall said.
Cameron Smith is an Auckland-based business reporter. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.