How Long Should I Fix My Mortgage For?

Last year, as people refixed their home loans, the number of borrowers opting for short-term mortgage terms peaked. Even higher floating rates saw a surge in popularity, as property owners banked on reduced rates in 2025.

Now, those rates have arrived, and many lenders are indicating that we’re already at the low point of the current interest rate cycle.

Indeed, Reserve Bank data shows that, since the beginning of the year, residential mortgage lending fixed for six months or less has dropped around 7%, while the amount on terms between one and two years has risen 28%.

So, if you’ve a mortgage, do you take advantage of already low long-term rates, which could start to rise by the end of the year? Or do you take a punt on a shorter-term rate hoping that longer-term rates dip slightly lower, which they might not?

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: 6 months vs 12 months

Most of the big banks are offering very similar six-month rates for those with 20% equity. And most of the banks’ 12-month rates are exactly the same as their two-year fixed rates.

To work out the best option for you, you’ll need to calculate the break-even rate. This is the interest rate you’ll need to secure next time your refix, in six months, to make opting for a higher rate now the cheaper option.

Working out the break-even rate involves some simple arithmetic: 12-month rate – (6-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

From the above numbers, you can see that 12-month rates will have to fall further by the end of the year to justify fixing for six months now. And most of the big banks consider this unlikely.

Although they’re all forecasting the Reserve Bank of New Zealand to make further cuts to the Official Cash Rate, most think the market has already factored in the cuts and that longer-term rates are now pretty much as low as they’re going to go.

For more on what the major banks have to say on where rates are headed, check out our story How Low Will Mortgage Rates Go in 2025?

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.