Fixed vs Floating Mortgage Rates
Which type of home loan rate is right for you? Compare the pros and cons.
Fixed Rate
5.19% – 5.29%
Current 2-year fixed across big-5 banks
Advantages
- +Certainty - know exactly what you'll pay
- +Protected if rates rise
- +Easier budgeting
- +Usually lower than floating
Disadvantages
- -Break fees if you exit early
- -Miss out if rates fall
- -Limited extra repayments (usually 5%/year)
- -Less flexibility for selling/refinancing
Floating Rate
5.75% – 5.89%
Current floating across big-5 banks
Advantages
- +No break fees - switch anytime
- +Unlimited extra repayments
- +Benefit immediately if rates fall
- +Flexibility for selling/refinancing
Disadvantages
- -Usually higher than fixed rates
- -Payments can increase unexpectedly
- -Harder to budget long-term
- -Risk if rates rise significantly
When to Choose Each Type
Choose Fixed When:
- 1.You want certainty and budget stability
- 2.Interest rates are expected to rise
- 3.You're unlikely to sell in the next 2-3 years
- 4.You're comfortable with limited extra repayments
- 5.Fixed rates are significantly lower than floating
Choose Floating When:
- 1.You might sell or refinance soon
- 2.Interest rates are expected to fall
- 3.You want to make unlimited extra repayments
- 4.You have variable income (bonuses, commissions)
- 5.You want maximum flexibility
The Split Mortgage Strategy
Many borrowers choose a split mortgage - part fixed and part floating. This gives you the best of both worlds.
Example: $600,000 Mortgage
Fixed 2-Year
$400,000
67% of loan
Floating
$200,000
33% of loan
Benefit
Extra repayments + certainty
Pro Tip: Laddering Strategy
Split your fixed portions across different terms (e.g., 1-year, 2-year, 3-year). This means you're always reviewing part of your mortgage annually, reducing the risk of being locked into unfavorable rates.
Current NZ Mortgage Rates (May 2026)
| Term | ANZ | ASB | BNZ | Westpac | Kiwibank |
|---|---|---|---|---|---|
| Floating | 5.79% | 5.79% | 5.84% | 5.89% | 5.75% |
| 1-year fixed | 4.69% | 4.65% | 4.65% | 4.69% | 4.75% |
| 2-year fixed | 5.29% | 5.25% | 5.19% | 5.19% | 5.29% |
| 3-year fixed | 5.49% | 5.49% | 5.39% | 5.35% | 5.55% |
| 5-year fixed | 6.29% | 5.89% | 5.79% | 5.59% | 5.99% |
Carded rates published by each lender, observed May 2026. Banks update these frequently — confirm directly before applying.
Fixed vs Floating FAQs
Should I fix my mortgage rate in NZ?
Fix if you want certainty and rates are likely to rise. In 2026, with rates potentially falling, shorter fixed terms (1-2 years) or a split mortgage (part fixed, part floating) may be optimal.
What is the difference between fixed and floating rates?
Fixed rates stay the same for a set period (1-5 years), giving payment certainty. Floating rates move with market conditions, currently higher but offering flexibility and no break fees.
Can I switch from fixed to floating?
Yes, but you'll pay a break fee if you exit a fixed term early. Break fees can be substantial depending on how much rates have moved since you fixed.
What is a split mortgage?
A split mortgage has part of your loan on fixed rates and part on floating. This gives you certainty on some payments while maintaining flexibility on others.
How long should I fix my mortgage for?
Consider fixing for 1-2 years if rates are expected to fall, 3-5 years if they may rise. Most borrowers choose 2-year fixed as a balance of rate and flexibility.
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