Fixed vs floating mortgage rates: how to weigh them up

Choosing between fixed and floating is a trade between certainty and flexibility. A fixed rate locks your rate and repayment for a set term, but limits how much extra you can repay and can carry a break fee if you leave early. A floating rate can change at any time, but lets you repay as much as you like, whenever you like. As at 10 November 2026, floating rates at the five main banks sit well above their shorter fixed rates: the average floating rate is 6.31% against 5.06% for one year fixed. On a $600,000 loan over 30 years that is $3,717.75 a month floating against $3,242.97 fixed for a year. We do not predict rates and this is not advice; below is a way to think it through, with the numbers.

Fixed and floating in one paragraph each

Fixed. You agree a rate for a term, typically from 6 months to 5 years. Your repayment stays the same for that term whatever happens to market rates. You can repay only a limited amount extra each year without a fee (ANZ allows up to $250 a week more plus a 5% lump sum; BNZ and Kiwibank up to 5% a year; we have not confirmed ASB or Westpac). If you repay more, sell, or switch banks before the term ends, a break fee may apply. At the end of the term, you refix or move to floating; ANZ says you can "fix it at another rate, or let your loan roll onto the floating rate".

Floating (Kiwibank calls it variable). The bank can change the rate at any time, up or down, and your repayment moves with it. You can repay as much as you like, whenever you like: ANZ says "On a floating ANZ Home Loan you can make extra repayments whenever you like." There is no break fee. Revolving credit and offset loans are floating too; see revolving credit and offset mortgages.

The rates and what they mean on $600,000

Below are the average of the five main banks' lowest advertised rates for each term (ANZ, ASB, BNZ, Kiwibank and Westpac), with the lowest and highest bank, and what each would mean on a $600,000 loan over 30 years. Rates as at 10 November 2026, read from the interest.co.nz table, which shows no date of its own. The lowest rates are mostly specials that need at least 20% equity.

*The 6-month figure assumes the rate stays the same for a full year; in reality it would be refixed after 6 months at whatever rate applies then. Kiwibank shows no 18-month term. Current rates by bank are on our mortgage rates page.

On these figures, the gap between floating and one year fixed is 1.25 percentage points, which is $474.78 a month on $600,000, or about $7,502 of interest in the first year. That gap is a snapshot: it has been different in the past and will change again.

Questions that help you decide

Instead of trying to guess where rates go next, it often helps to ask what you need from the loan over the next few years.

How much certainty do you need?

If a rise in your repayment would be hard to absorb, a fixed rate gives you a known figure for the term. Longer terms give certainty for longer, but at these rates they cost more today: 5 years at 5.93% is $327.38 a month more than 1 year at 5.06% on $600,000. You are paying for the certainty.

The same applies between shorter fixed terms. On $600,000, fixing for 2 years at 5.35% costs $31,898 of interest in the first year, against $30,159 at 1 year and 5.06%: about $1,739 more for knowing your rate for a second year. Whether that turns out to have been worth it depends on the one-year rate available a year from now, which nobody knows today. Thinking of the difference as the price of certainty, rather than as a bet, keeps the decision grounded in what you can afford.

Will you want to repay a lot extra, or sell?

If you expect a bonus, inheritance, property sale or a move to another bank, a fixed rate's limits and break fees matter. Floating, or a floating portion, keeps you free. See break fees and our break fee calculator for how large a fee can be.

How would you cope if rates moved against you?

A useful test is to work out your repayment at a higher rate. On $600,000 over 30 years, every 1 percentage point adds roughly $370 to $395 a month at these rate levels: for example, 5.06% is $3,242.97 and 6.06% would be $3,620.49, a rise of $377.52. Our fixed vs floating calculator lets you compare terms and test different rates for the next refix.

Do you want to spread the timing?

Fixing everything for one term means the whole loan refixes on one day, at whatever rates apply then. Splitting across terms spreads that out; see split loans.

The OCR and where mortgage rates come from

The Reserve Bank's Official Cash Rate (OCR) influences what banks pay for money, which feeds through to mortgage rates. Fixed rates are also tied to wholesale markets: BNZ, for example, explains its break fees by comparing wholesale rates at the start of a fixed period with current wholesale rates. Wholesale rates reflect what markets expect in future, so fixed rates can move before or without an OCR change.

The OCR is 2.75%. The Reserve Bank raised it from 2.50% on 2 September 2026 and held it on 28 October 2026 by a 4 to 3 vote; markets had expected another rise. The next scheduled decision is reported as Wednesday 9 December 2026 (we could not read the Reserve Bank's own page to confirm). Our guide to the OCR and mortgage rates explains the link.

None of this tells you what rates will do. In October, markets expected a rise and the Reserve Bank held instead, which shows how hard rates are to call. We do not make predictions on this site.

Common approaches people take

There is no single right answer. Some approaches you will see:

• Fix the lot for one term. Simple and certain for that term, with everything refixing at once.
• Split across two or three fixed terms. Part of the loan refixes each year or so, spreading the timing. Kiwibank says "You can split your home loan into multiple loans and choose to have more than one fixed loan".
• Mostly fixed, some floating. A floating or revolving part takes extra repayments and lump sums freely while most of the loan has a known rate.
• All floating. Maximum flexibility, at the floating rate, with the repayment exposed to every rate change.

This guide is general information, not financial advice. A registered financial adviser or mortgage adviser can look at your situation. Rates as at 10 November 2026; they change often, so check with the banks before deciding.

Questions people ask

Is fixed or floating cheaper?

As at 10 November 2026, fixed rates are lower than floating at every term: the average one-year fixed rate is 5.06% against 6.31% floating. Whether fixed ends up cheaper over time depends on future rates, which nobody can know.

What happens if I break a fixed rate?

The bank may charge a break fee if rates have fallen since you fixed, to cover its loss. The amount depends on the balance, the time left and how much rates have moved. Our break fees guide and calculator explain and estimate it.

Can I pay extra on a fixed rate?

Yes, up to your bank's allowance. ANZ allows up to $250 a week more plus a 5% lump sum a year; BNZ and Kiwibank allow up to 5% a year. We have not confirmed ASB's or Westpac's allowances.

Does the OCR set my mortgage rate?

Not directly. It influences banks' funding costs, especially for floating rates. Fixed rates also depend on wholesale rates for the term, which reflect market expectations. The OCR is 2.75% as at 10 November 2026.