The Reserve Bank raised the OCR again this week, from 2.50% to 2.75%. ANZ has already passed the full increase on to floating rates, with other banks expected to follow shortly. If you are on a floating rate, your repayments are about to go up.
The question I am getting from clients right now is: should I fix, and if so, for how long?
Here is my honest take.
What Floating Looks Like Right Now
Floating rates are sitting at around 6.04%. That is a significant premium over what you can lock in on a one year fix right now. With the RBNZ signalling further OCR increases are possible before the end of 2026, sitting on floating means you could be absorbing more cost over the coming months.
If you are currently on floating at 6.04%, you are paying over 1.25% more than the best one year fixed rate of 4.79%. On a $500,000 mortgage that is roughly $6,250 extra per year.
What Fixed Looks Like Right Now
One year fixed rates are sitting around 4.79% on special rates. That is lower than floating, and it gives you certainty for the next twelve months while the rate picture becomes clearer. The two year rate is slightly higher at around 5.20% to 5.50% depending on the lender, which means the market is not yet convinced rates will keep rising long term.
Longer terms are creeping higher as banks start pricing in future OCR increases, which is why most borrowers right now are favouring shorter terms.
My General Thinking for Most Borrowers
If you are rolling off a fixed term soon or sitting on floating, now is a reasonable time to review. Not because I can tell you exactly where rates are heading, nobody can, but because floating is currently more expensive than fixing short term, and that gap is likely to widen if the OCR rises again.
For most Taranaki borrowers I am working with right now, a one year fix or a split structure gives a good balance. You lock in a rate that is cheaper than floating, and you are not committed for so long that you miss any future cuts if the RBNZ changes direction in 2027.
A split structure means fixing part of your mortgage and leaving part on floating or a shorter term. It removes the pressure of trying to perfectly time the market, because you are not betting everything on one rate.
The One Thing I Always Say About This Decision
Do not try to pick the market perfectly. The clients who feel worst about their rate are usually the ones who agonised over the timing rather than just getting a structure that suits their situation and income.
Your mortgage structure should match your life, not the other way around. If your income is tight right now, certainty matters more than chasing the lowest possible rate. If you have flexibility and savings, you can afford to take a slightly different view.
If your mortgage is coming up for renewal, or you are not sure what you are sitting on right now, give me a call and we will look at it together. It takes twenty minutes and it costs you nothing.
General information only. Not personalised financial advice. Your situation will differ and you should seek specific advice before making any decisions about your mortgage.