South Island short-term lending finding steady rhythm
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A mortgage adviser’s guide to what’s driving activity in the South Island, and how FMT is positioning itself to support non-bank opportunities
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For South Island advisers, the short-term lending opportunity is no longer defined by development finance alone.
While development finance remains an important part of the market, borrowers are increasingly looking for a wider mix of funding solutions: bridging between transactions, releasing equity for business or investment purposes, accessing higher leverage where a strong project needs more capital or moving quickly when a main bank approval will not fit the timing.
For Natalie East, business development manager at First Mortgage Trust (FMT) based in Christchurch, that broader demand is showing up in the conversations she is having with advisers across the South Island.
“We seem to be quite insulated down here,” says East. “Even when things slow down or put some people off doing projects, as a whole we just seem to keep ticking away.”
That steadiness matters, but the bigger opportunity for advisers is the breadth of lending needs that now sit beneath it. As bank appetite remains selective, specialist lenders like FMT are helping advisers support good borrowers when the structure, time frame or leverage required does not fit a mainstream lending pathway.
First Mortgage Trust (FMT) is an investment fund manager specialising in property finance. For 30 years, FMT has been helping New Zealanders protect and grow their wealth by providing consistent investment returns. Today, the company has over $2 billion in funds under management and more than 7,500 investors nationwide. FMT also provides mortgage advisers and clients with tailored property finance through first mortgages across the residential, commercial, industrial, construction and development sectors in New Zealand. FMT has offices in Auckland, Tauranga, Wellington and Christchurch, with over 70 staff members, and is continuing to grow to meet market demand.
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“[Christchurch] has obviously had a lot of development go into it. The stadium and just the general hospitality upgrades in the city have helped bring businesses and housing back into the city”
Natalie East,
First Mortgage Trust
Published 3 Aug 2026
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“I don’t expect [brokers] to know everything about the non-bank space. There are so many different providers and so many different options out there that you’re not going to be an expert on all of it”
Natalie East,
First Mortgage Trust
Christchurch, in particular, has benefited from sustained investment in public infrastructure. The opening of Te Kaha stadium, the hospitality revival in the central city and the return of businesses that had migrated to suburban commercial areas are all contributing to renewed confidence in urban development.
“The city has obviously had a lot of development go into it,” says East. “The stadium and just the general hospitality upgrades in the city have helped bring businesses and housing back into the city.”
The broader regional story is one of steady volume and a shifting product mix.
“It’s a good mix of projects: townhouses, apartments, standalone dwellings and also subdivisions,” she says.
The latest Westpac Regional Roundup report shows that the only regions in New Zealand not experiencing cool or cold economic conditions are Canterbury and Southland. East expects the trajectory of the past six to 12 months to continue and absorb any shocks, showing that consistency and resilience are the dominant trends.
More people, more homes Migration is reinforcing that momentum. Remote work policies that became normalised after COVID have made regional centres more viable as permanent bases, and the South Island has been a beneficiary. East also points to growing interest from Australian buyers drawn by a property market at home that leaves New Zealand looking comparatively affordable.
“We see quite a few Australians buying into Queenstown and Wanaka,” she says. “Their property market is very turbulent, so we’ve seen some growth there.”
Recent regulatory changes to the Overseas Investment Act threshold have opened the door for some additional foreign buyer activity, though East says the response has been measured rather than dramatic. The market is drawing steadily from familiar sources instead of experiencing any sharp influx.
That growth is creating different types of lending conversations. Some clients still need development finance to complete a project. Others need bridging to secure their next move, equity release to unlock capital for a business or investment purpose, or a more flexible short-term loan where speed and certainty matter.
Not everything in the outlook is uncomplicated. East flags one area where she sees potential supply pressure building, particularly in Christchurch’s inner-city apartment and townhouse pipeline.
“We do have a lot of apartment builds coming to Christchurch, which is not something we’ve really seen before, or not for a while,” she says. “I’m not sure whether there’s potentially going to be a bit of an oversupply of the smaller townhouse- or apartment-type living.”
Te Kaha stadium has driven demand for short-term accommodation closer to the city centre, but East is candid that the maths needs to be carefully monitored by advisers placing clients into those kinds of projects. The product mix coming through is now evolving towards the top end of the market.
“There’s been a shift away from two-bedroom-no-carpark-type developments – we were already slightly oversupplied with those – to maybe higher-end builds in good locations and good school zones where there’s still a bit more margin in the project,” says East.
Build costs in the South Island have been relatively contained. East notes that suppliers marked fuel surcharges as a separate line item during the period of peak cost pressure, which meant the underlying price base was not permanently ratcheted up when those pressures eased; this helped market confidence. According to analysis of StatsNZ data, costs per square metre for dwellings in Canterbury have barely moved in two years, sitting in a $2,815 to $2,966 range across nine quarters, with the trend flat to slightly down. For townhouses, the cost per square metre has dropped consistently from its 2023 peak of around $3,290 to $2,845 in Q1 2026, a cumulative fall of roughly 13%.
Also, labour availability has improved, with more builders looking for work and developers finding themselves with more options than they had during the period of peak construction activity.
“Instead of scrambling to try and get enough people on the ground, there have been plenty of options, which has helped,” says East.
What FMT offers FMT’s lending offer is designed for property-backed borrowers who need speed, flexibility or a tailored structure. Development finance remains an important part of that proposition, with loans typically structured on 12- to 24-month terms and options ranging from six months out to three years where projects require it. The ability to capitalise interest is a key feature for borrowers managing cash flow through a build, removing the requirement to service debt until settlement or sale.
Beyond development, FMT also provides short-term lending solutions for borrowers who need to release equity, obtain bridging finance or fund non-personal-property-related purposes where there is a clear exit.
FMT’s blended loan product, delivered in partnership with New Zealand private capital provider CapitalGroup, extends FMT’s reach for borrowers who need higher leverage. Depending on the project, this structure can achieve up to a 100% loan-to-cost ratio, with CapitalGroup providing funding over and above FMT’s standard position. For borrowers and advisers, the benefit is a more streamlined funding solution: one lending conversation, one coordinated structure and a New Zealand-based lender involved throughout, instead of having to manage separate bank and mezzanine finance arrangements – often with offshore providers.
“We fund up to where we would normally, depending on the project, and CapitalGroup can provide funding above that,” says East. “For advisers, it means they can offer clients a
more complete funding solution through one coordinated structure, rather than trying to piece together a loan and separate mezzanine funding.”
Equity release loans are also available across a range from six months to five years, with interest either capitalised or serviceability assessed on a case-by-case basis. The requirement throughout is that lending is for non-personal purposes and that a clear exit strategy is documented from the outset, whether that is a sale, a refinance to a main bank or a rollover with FMT.
FMT has focused on turnaround times, targeting approval within 48 hours of receiving a complete application. East says the team has simplified policies and procedures to improve efficiency. In urgent cases, the lender has moved from submission to approval and drawdown within a week.
Helping advisers broaden the conversation One of the more practical things East describes is how FMT approaches advisers who are less familiar with short-term and non-bank lending. For many mortgage advisers, a development, bridging or equity release deal might come through the door only a handful of times a year, which makes deep product knowledge difficult to maintain.
East’s response to that reality is deliberately low pressure. She describes her role as being approachable and present, meeting advisers face to face and making clear that no question is too basic. The first transaction is typically the hardest, and she is focused on guiding advisers through it in a way that builds confidence rather than dependence.
“I don’t expect them to know everything about the non-bank space,” she says. “There are so many different providers and so many different options out there that you’re not going to be an expert on all of it.”
The aim is for advisers to be able to articulate the product to their clients, not just pass the inquiry along. East adds that if a deal is not right for FMT, she will say so and try to point the adviser in the right direction.
“It’s always hard, that first transaction – just guiding people through it,” she says. “Then once they’ve done one, they realise it’s not actually as scary as it seems.”
That creates a real commercial opportunity for advisers across the South Island. Development will remain part of the market, but the larger opportunity is helping good borrowers access the right short-term lending solution when timing, structure or bank appetite becomes the constraint.
For advisers, the opportunity is not just to find funding for more complex projects but also to broaden the lending conversations they can have with clients and give good borrowers a clear path forward when the banks cannot.
A not-so-chilly economic
winter for the south
Region
Economic
Temperature
Source: Westpac Regional Roundup, April 2026
Northland
Auckland
Waikato
Bay of Plenty
Gisbourne and Hawke’s Bay
Taranaki and Whanganui/Manawatu
Wellington
Neslon, Tasman, Marlborough
and West Coast
Canterbury
Otago
Southland
COOL
COOL
COOL
COOL
COOL
COOL
COOL
HOT
MILD
COOL
COOL
Canterbury new dwelling consents
Quarter
YoY % change
YoY % change
2024 Q1 2024 Q2 2024 Q3 2024 Q4 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2026 Q1
1,305 1,766 1,694 1,779 1,412 1,614 1,994 2,296 2,125
-22.7% +2.5% +5.2% -8.2% +8.2% -8.6% +17.7% +29.1% +50.5%
$2,867 $2,871 $2,924 $2,934 $2,819 $2,860 $2,839 $2,966 $2,815
+1.5% +1.2% -1.0% -1.9% -1.7% -0.4% -2.9% +1.1% -0.1%
Source: interest.co.nz / Stats NZ
TOTAL CONSENTS
Avg $/sqm