Last year, as people refixed their home loans, the number of borrowers opting for short-term mortgage terms peaked. Higher floating rates saw a surge in popularity, too, as property owners banked on reduced rates.
However, now that it seems we’ve passed the low point of the interest rate cycle, longer-term fixes of between one and three years are proving more popular: up from around 16% of new residential lending 12 months ago to 25%.
So, if you’ve a mortgage, do you fix for longer now, or do you take a punt on a shorter-term rate, hoping for lower rates in the near future?
Of course, the final decision is up to you, and it must align with your budget and financial goals. However, it’s not a bad idea to do a couple of quick sums to see how the options stack up.
How long should I fix my mortgage for?
Most of the big banks are offering very similar rates for those with 20% equity.
To work out the best option for you, you’ll need to calculate the break-even rate. This is the interest rate you would need to secure next time you refix to make opting for a higher rate now the cheaper option.
Working out the break-even rate involves some simple arithmetic, for example: 12-month rate – (six-month rate – 12-month rate). But to save you the effort, we’ve done the math for you.
Six months vs 12 months: break-even rate
| Bank | Six-month rate | 12-month rate | Break-even rate |
| ANZ | 4.69% | 4.49% | 4.29% |
| ASB | 4.65% | 4.49% | 4.33% |
| BNZ | 4.69% | 4.49% | 4.29% |
| Kiwibank | 4.59% | 4.49% | 4.39% |
| SBS Bank | 4.69% | 4.49% | 4.29% |
| The Co-operative Bank | 4.65% | 4.45% | 4.25% |
| TSB | 4.69% | 4.49% | 4.29% |
| Westpac | 4.69% | 4.49% | 4.29% |
From the above numbers, you can see that 12-month rates would need to fall to justify fixing for six months now. And this seems unlikely, as lenders have already started to lift their rates.
As you can see from the current two- and three-year rates below, most banks are forecasting higher mortgage rates over the next couple of years, and two-year rates are already pretty much the same as current six-month rates:
| Bank | 2-year rate | 3-year rate |
| ANZ | 4.69% | 5.09% |
| ASB | 4.75% | 5.09% |
| BNZ | 4.69% | 5.09% |
| Kiwibank | 4.69% | 5.15% |
| SBS Bank | 4.69% | 5.09% |
| The Co-operative Bank | 4.79% | 5.09% |
| TSB | 4.69% | 5.09% |
| Westpac | 4.75% | 5.05% |
For more on what the major banks have to say on where rates are headed, check out our story Where Will Mortgage Rates Go in 2026?
Lowest Mortgage Rates for Refinancing
Looking to refinance your mortgage? The table below displays some of the 1-year fixed-rate home loans on our database (some may have links to lenders’ websites) that are available for home owners looking to refinance. This table is sorted by current interest rates (lowest to highest), followed by company name (alphabetical). Products shown are principal and interest home loans available for a loan amount of $500K in Auckland. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products. Canstar may earn a fee for referrals.
Compare Lowest Home Loan Rates for Refinancing
About the author of this page
Bruce Pitchers is Canstar NZ’s Content Manager. An experienced finance reporter, he has three decades’ experience as a journalist and has worked for major media companies in Australia, the UK and NZ, including ACP, Are Media, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. As a freelancer, he has worked for The Australian Financial Review, the NZ Financial Markets Authority and major banks and investment companies on both sides of the Tasman.
In his role at Canstar, he has been a regular commentator in the NZ media, including on the Driven, Stuff and One Roof websites, the NZ Herald, Radio NZ, and Newstalk ZB.
Away from Canstar, Bruce creates puzzles for magazines and newspapers, including Woman’s Day and New Idea. He is also the co-author of the murder-mystery book 5 Minute Murder.
Share this article