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Quite a bit has shifted since I last wrote about this.
I’ve been away for a few months (another story, I'll write on this next month!), and before I left in late September, and right through 2025, the general wisdom was fairly consistent: fixing your home loan for 12 months (all else being equal) was usually a sound strategy.
The thinking was straightforward. Home loan interest rates were still nudging down, and by the time that one year rate came up for renewal, rates were expected to be lower again, creating another opportunity to benefit.
While I was away, rates did continue to ease, alongside a reduction in the Official Cash Rate (OCR), which dropped to 2.25% in November 2025.
More recently, longer term home loan rates (around the three to five year mark) have edged up slightly. That said, at the time of writing, one bank has already pulled those rates back again. This reflects recent economic news and a related drop in wholesale interest rates, in simple terms, the rates banks “buy” their money at.
The Reserve Bank met on Wednesday 18 February and, as expected, held the OCR steady.
What really mattered was the messaging. The key takeaway was that the Reserve Bank anticipates a rate increase later in the cycle. As they put it:
“Conditional on the central economic outlook, we project that the OCR will remain around its current level in the near term, before gradually increasing from late 2026.” RBNZ Monetary Policy Statement, February 2026
This outlook was a little slower than markets had expected, which explains the recent dip in wholesale rates.
This is where things feel different from last year.
There is now more uncertainty about where rates might land. If you fix for one year, there is a higher chance than previously that you could be refixing at a higher rate next time, although that’s far from guaranteed.
At the other end of the spectrum, fixing everything for three years or more comes at a cost. You are effectively paying a premium now, in the hope that your longer term fixed rate looks cheap compared to what’s available in one or two years’ time.
Given that uncertainty, there is a reasonable case for hedging your risk.
That might mean splitting your home loan into at least two portions, for example, fixing some for a year and some for two or three years. This approach reduces the impact if rates rise, without fully locking you in if rates fall.
• Repayments tend to be more stable over time, regardless of what interest rates do.
• It can be harder to move banks or negotiate aggressively, as part of your loan is always fixed.
• If rates fall sharply, you won’t capture the full benefit you might see if everything was on shorter term rates, although the flip side is that it won’t hurt as much if rates go the other way.
As always, there’s no single “right” answer.
Every option involves trade offs, and what works best will depend on your broader financial situation, risk tolerance, and plans over the next few years. The key is understanding your options and putting a refix strategy in place that fits your circumstances, not just this month’s headlines.
Book a 15 -minute call with our team to find out how we can help you with your mortgage strategy.
Brendon.
Brendon Ojala (FSP119244) is a Financial Adviser with Velocity Financial (FSP95466). No financial decision should be taken based on the information in this blog alone. Please see our disclosure statement on our website.
About Brendon:
Hi, I'm Brendon, one of the owners and advisers at Velocity Financial. I have been giving advice on mortgages and insurances at Velocity for around 15 years, and it is great to be able to work with people to achieve their financial goals. Prior to giving money advice, I worked as a youth worker and managed teams for a not-for-profit organisation. I live with my wife and one of my sons (the other one only stays when he needs food) in Berhampore, and if I'm not talking revolving credit accounts, I can be found running the trails of Wellington.
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