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OCR Decision and Your Mortgage: Fix for 1 or 2 Years in NZ?

Byadmin

If your fixed home loan term ends in the next two months, the Reserve Bank’s latest Official Cash Rate (OCR) decision matters more to you than to almost anyone else in New Zealand. This guide explains what the OCR actually moves, why the 60-day rate lock window is where the money is, and how to decide between fixing for one year or two.

What the OCR does to NZ mortgage rates

The OCR directly drives floating rates and short fixed terms of six months to one year. Longer terms of three to five years are priced off wholesale swap rates, which move on what the market expects the OCR to do over the next few years, not on what it did today. That is why a cut can arrive and your bank’s three-year rate barely moves: the market priced it in months earlier.

Every bank publishes its carded rates, and KiwiSwitch checks them every four hours. See today’s lowest 1, 2 and 3-year fixed rates on our mortgage rate comparison.

The 60-day rate lock: the most valuable window in your mortgage

Most New Zealand banks let you lock a new rate up to 60 days before your current term ends. Many will also give you the lower of the locked rate and the rate on the day your new term starts. That means locking early has almost no downside: if rates fall you get the fall, and if they rise you keep the rate you locked.

Use the free refix countdown to enter your end date and get an email at 60, 30 and 7 days out.

Fix for 1 year or 2 years? A simple way to decide

  • Fix for one year when the lowest one-year rate is below the two-year rate and the market expects further OCR cuts. You accept a little rollover risk in exchange for a lower rate now and the option to refix lower again.
  • Fix for two years when the two-year rate is at or below the one-year rate, or when a surprise rise would strain your budget. Certainty has a price, and sometimes that price is zero.
  • Split the loan if you cannot decide. Half on one year and half on two is a common and sensible hedge used by thousands of NZ households.

Three moves that beat watching the rate

  1. Ask for a rate below the card. Banks negotiate, especially when you show them a competing offer. Our mortgage table shows every lender’s advertised rate so you know what to ask for.
  2. Ask about a cash contribution. Moving to a new bank often comes with a cash payment, and some banks pay to keep you.
  3. Keep your repayments where they are. If your new rate is lower, keep paying the old amount. The difference comes straight off the principal and shortens your loan. Try it on the mortgage-free calculator.

Frequently asked questions

How soon after an OCR cut do mortgage rates change?

Floating rates usually change within days. Fixed rates often moved before the announcement because wholesale rates anticipated it.

Can I break my fixed rate early to get a lower one?

Yes, but the bank will charge a break fee based on wholesale rates. Our break-fee estimator shows whether it is worth it.

Is a 6-month fixed rate a good idea?

Six-month rates are popular when cuts are expected. They give you the earliest chance to refix lower, at the cost of refixing more often.

This guide is general information, not financial advice. Rates in our tables are lenders’ carded rates and change often.