Mortgage rates are rising again: how long should you refix for?

The direction of mortgage rates has changed during 2026. After a period of falling rates, fixed mortgage rates have started to rise as markets price in higher inflation risks and a gradual return to a more neutral interest-rate environment.

As at 10 August, the sharpest two-year special rate among the major banks was 5.19%.

The two-year term is attractive for borrowers who want a reasonable period of certainty without committing to a longer fixed term. However, the lowest advertised rate is not necessarily the best overall option. Bank policy, cash contributions, revolving credit facilities, offset arrangements, loan structure and repayment flexibility can all be important.

What could happen in 2027?

Forecasts are varied, but the broad theme is that mortgage rates may not return to the exceptionally low levels seen earlier in the decade.

Some economists expect the OCR and mortgage rates to move higher through 2026 and 2027, while others expect only modest increases as inflation and economic growth settle. Published forecasts from New Zealand economists gathered by Trademe show a general expectation that interest rates will be higher in 2027 than the lows reached during the current cycle, although the size and timing of any increases remain uncertain.

BNZ has taken a more cautious view, noting that fixed rates have already risen during 2026 and that its outlook allows for further increases in floating and fixed mortgage rates.

That does not mean borrowers should automatically fix for the longest possible term. It does mean that choosing a loan term based solely on the expectation of further rate cuts could leave you exposed if the outlook changes.

General guidance we’re giving clients

• Do not assume that the lowest rate today will still be available when your next fixed term expires.

• Consider splitting your lending across different terms rather than placing the entire loan on one rate.

• Keep some flexibility if you expect to move, renovate, receive a large lump sum or change your lending structure.

• Stress-test your budget at a higher rate than you are currently paying.

• Review the full loan structure, not just the headline interest rate.

• Check your bank’s rate-lock rules and timing before deciding when to secure a rate.

For some borrowers, fixing for two years may provide a useful balance between certainty and flexibility. For others, a combination of shorter and longer terms may be more appropriate. The right answer depends on your cash flow, risk tolerance, expected time in the property and wider financial goals.

A fixed rate expiry is a good time to review your mortgage to ensure it is still working well for you and your goals. We will help you look beyond the headline interest rate and review your lending as a whole, including your loan structure, repayment strategy, cash-flow needs and future plans. We can compare options across our lending panel and help you choose a mortgage strategy that suits your circumstances. If you are an existing client, your financial adviser will be in touch roughly 70 days before your fixed rate expiry to review your options. For new clients, we do welcome you to get in touch before your current fixed term expires so there is plenty of time to review your options.