Should You Fix Your Home Loan for Longer?

Does that automatically make a longer fixed term the smarter choice?

Nurain Nadzirah

20 September 2026

Source: RNZ

The OCR is now 2.75%, after the Reserve Bank raised it by 25 basis points on 2 September. Inflation has also picked up, with higher fuel prices adding pressure, and the Reserve Bank has left the door open to further increases.

That has brought a familiar question back for Kiwi borrowers:

Should you fix your home loan for longer?

Here’s what the latest rate changes mean for Kiwi borrowers.

What’s happening with mortgage rates right now?

RNZ reports that six-month fixed mortgage rates at the major banks are currently around 4.75%, with one-year rates just below 5%.

Two-, three-, four- and five-year fixed rates are sitting higher, generally between 5.39% and 5.69%.

So, shorter fixed terms are still cheaper?

Yes, but the gap between shorter and longer terms has narrowed enough to make longer fixes more worth considering.

Westpac chief economist Kelly Eckhold told RNZ that borrowers were paying only around 0.4 to 0.5 percentage points more to move from a one-year rate to a three-year rate. So is paying a little more for certainty actually worth it?

The tricky part: nobody knows where rates are going

Some economists expect the OCR to rise further, but only modestly. Others see more upside risk if inflation proves harder to bring down.

BNZ chief economist Mike Jones said markets were already pricing in an OCR peak of around 3.5%. He also estimated there could still be another 20 to 50 basis points of increases in fixed rates, particularly at shorter terms.

But you don't want your mortgage strategy to depend entirely on getting the forecast right.

What does this mean for Kiwi borrowers?

The important thing is not trying to predict the exact top of the OCR cycle. It's choosing a mortgage structure that still works if your prediction is wrong.

Right now, that's probably a more useful way to think about fixed vs floating and one-year vs longer-term mortgage rates in New Zealand.

So, don't just look for the lowest rate.

Look at what the rate means for your repayments, your flexibility and your plans.

Still weighing up 1 year or longer?

Let’s work through what the different options could mean for your situation.

Reach out to a Tella mortgage adviser

This article is for informational purposes only. It does not consider your personal financial situation or objectives. Please consult with Tella mortgage and financial experts before making any decisions regarding your mortgage or debt strategy.

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