Fixed vs Floating: Making Sense of NZ Rates
With NZ mortgage rates fluctuating, choosing between fixed and floating is more important than ever. Here's what you need to know in 2026.
Fixed Rate Pros & Cons
Pros:
- certainty of knowing exact payments
- Protection if rates rise
- Easier budgeting
- Sleep better at night
Cons:
- Can't take advantage of rate drops
- Break fees if you switch
- Usually higher starting rate
- Less flexibility
Floating Rate Pros & Cons
Pros:
- Lower rates than fixed
- Extra repayments anytime
- No break fees
- Can switch to fixed anytime
Cons:
- Uncertainty if rates rise
- Payment fluctuations
- Harder to budget
- Risk of rate increases
Current NZ Landscape (March 2026)
Fixed rates: 5.99% - 6.49% Floating rates: 6.75% - 7.25%
When to Choose Fixed
- You value certainty
- Budget is tight
- Rates are historically low
- You plan to stay long-term
When to Choose Floating
- You can handle fluctuations
- Plan to pay off quickly
- Might sell/refinance soon
- Think rates will drop
Hybrid Strategy
Many NZ homeowners split their mortgage:
- 50-70% fixed for certainty
- 30-50% floating for flexibility
The Bottom Line
There's no crystal ball. Consider your risk tolerance, timeline, and cash flow. Whatever you choose, review it annually.