Rates are rising: what to think about before you fix.

Where we're at, August 2026

Before we start: at dosh we are not crystal ball gazers. We analyse the market and draw on our experience as mortgage advisers to give you a straight-up view of where we are and how things are shaping up.

Rates have turned. Banks have pushed home loan rates up over the last two months, and the term you fix now could shape what you pay for years. The right call depends on your situation, so rather than tell you what to pick, we'll help you think it through. That's what an adviser is for.

_{Rates have turned, but this isn't the last cycle again}

After a long run of falling rates, the picture has turned. In July the Reserve Bank lifted the Official Cash Rate to 2.50%, the first rise this cycle, and banks have already moved their mortgage rates up in response. Many economists currently expect some further upward pressure on the OCR during 2026, although the timing and extent of any future increases remain uncertain.

It's worth keeping in perspective. In the last cycle, between late 2021 and May 2023, the OCR ran from 0.25% to 5.50%, one of the steepest hiking cycles in our history, with the average one-year fixed rate reaching about 7.50% by early 2024. Current forecasts generally indicate a more modest cycle than the increases experienced between 2021 and 2023. However, the future path of the OCR remains uncertain and may change as economic conditions develop. That matters for how you think about term, because the fear of runaway rates led some borrowers to fix for longer periods. Later, some found that shorter-term market rates had fallen before their fixed term ended. More on that when we look at longer terms.

Much of what happens from here is driven by forces beyond New Zealand: oil and fuel prices, trade fragmentation and tariffs, and the level of the dollar all feed into our inflation, and in turn the OCR. These cut both ways, and 2027 depends on events nobody can forecast. While current forecasts suggest further upward pressure on rates, the future path of interest rates remains uncertain, but it's all the more reason to keep some flexibility and get advice rather than bet on one outcome.

_{18-month to 2-year fixed terms are attracting attention}

Many economists and home loan advisers are currently focusing on the 18-month and 2-year fixed terms because they can offer a balance between repayment certainty and flexibility. The18-month has been pricing a touch sharper than the two-year lately.

The choice between the two often comes down to a trade-off between certainty and flexibility. The more repayment certainty you want, the more attractive a longer fixed term may be

_{Why shopping around matters more than you might think}

Right now the main banks have largely landed on the same advertised rates. On the terms most people are looking at, there is very little between them: the one-year is4.99% across all four majors and the two-year is within a few hundredths of a percent (as at 20 August). The 18-month is the one place a little daylight remains between banks, which is itself a reason to check.

But it still matters which bank you go with. The difference has just moved some where you cannot see: the discretionary, or negotiated, rate. When banks match on advertised rates, they can compete instead on what they will quietly knock off for the right customer. That discount:

- isn't published on any comparison site
- varies by bank, and by how much they want your business that week
- depends on your situation: your equity, income, and how much you are borrowing

A negotiated 0.10% to 0.20% below the advertised rate doesn't sound like much, but on a $600,000 loan that is roughly $1,200 to $2,400 over a two-year fix, on what looks like an identical rate to everyone else.

That is what an adviser who shops a panel does. At dosh we put your situation in front of a panel of banks and push for the sharpest deal each will actually do, not the one on the shelf. We can't promise a specific rate, but when the advertisedrates are all the same, having someone negotiate the discount for you is where the real value sits.

_{Weighing up each term}

There’s no universally right answer, but here’s how each option stacks up in the current environment.

One-year fixed. Still right for some situations, but you are betting rates will not climb much by renewal. With the direction of travel upward, that is a riskier assumption than it was a year ago. Go in with eyes open.

18-month fixed. Offers a balance between repayment certainty and flexibility. This term provides an opportunity to review your rate sooner than a longer fixed term..

Two-year fixed. A competitive rate that can provide repayment certainty for a longer period than shorter-term options whilst not locking you in for an extended time..

Three to five year fixed. Maximum certainty over a longer horizon, useful if budget predictability matters above all else. But this is where the last cycle's lesson bites. Longer fixed terms provide greater repayment certainty, although they may offer less flexibility if your circumstances change, or rates start to come down. Longer terms also tend to price higher, though in the current market that is not always the case, which is worth checking rather than assuming.

Floating. The most flexible option, usually at the most expensive rate. Best suited to a smaller portion of your loan where you want the freedom to make lump-sum repayments without penalty.

_{Ways to structure your loan}

Splitting your loan

You do not have to put everything on one term. Splitting your home loan can be a good way to get certainty where you need it while keeping some flexibility. It also staggers your renewals, so you are not re-pricing everything at once if rates have moved.

For example, you could anchor the bulk on a two-year fix, take a smaller slice on a shorter term or floating, and review from there. For example, on a $600,000 home loan: 50% on a two-year fixed, 30% on an 18-month fixed, and 20% floating.

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The floating trick

Keeping even 10 to 20% of your home loan on a floating rate can make a real difference over time. Bonuses, tax refunds, any windfall: you can put it straight onto the loan. Every dollar reduces your principal from that moment forward, cutting the interest you would otherwise pay for years.

_{Buying or refinancing can put cash in your pocket}

Many banks offer a cash contribution on new lending, typically 0.5% to 0.9% of your loan. On a $600,000 loan, that is up to $5,400. Whether you’re buying your first home or bringing an existing loan across, it is real money on the table, and it is one of the levers banks compete on hardest right now.

If you’re buying, that contribution can help offset the upfront costs of getting into your home, from legal fees to moving.

If you’re refinancing, you could put the cash straight back onto your loan. Reducing your principal means you are paying interest on a smaller balance from day one.

Worth noting: cash contributions usually come with a claw-back period, typically three to four years.

_{Before you decide}

The right term is not just about where rates are heading. It is about your life, your cash flow, and what lets you sleep at night. A few questions worth asking:

How stable is your income? If it varies month to month, the flexibility to make extra repayments when times are good can matter more than the rate itself.

Any big life changes ahead? Selling, renovating, or refinancing mid-term can trigger break fees on fixed loans. Factor this into how long you commit.

Can you sleep at night? Rate anxiety is real. If not knowing what your repayments might be in twelve months bothers you, the 18-month or two-year terms could provide you with more repayment certainty whilst still providing some flexibility. Just be wary of over-fixing out of fear.

_{There's a lot to weigh up. Let's find your path}

Term choice, splitting, floating, refinancing, and which lender is most competitive for your circumstances: it adds up to a lot of moving parts, and the right combination is genuinely personal. That is where an adviser earns their keep.

Our home loan adviser, Jason, can walk through your situation, whether you are buying, fixing, or refinancing, shop the panel of banks on your behalf, and help you structure a loan that fits your life. There is no upfront cost to have that conversation, and it is the quickest way to turn all of the above into a clear path.

Book a chat

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This article contains general information only and does not constitute personalised financial advice. It has been prepared without taking into account your objectives, financial situation, or needs. Interest rates, lender offers, cashback incentives, and lending criteria can change and are subject to lender terms and conditions. Before making a decision, consider whether the information is appropriate for your circumstances and seek personalised financial advice if required. MCA Investments Limited (dosh) is a licensed Financial Advice Provider (FAP) and a registered Financial Service Provider (FSP1000801). Please refer to our Financial Advice Disclosure for further information.

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