NZ Mortgage Fix vs Float Calculator

Fixed vs Floating Mortgages in New Zealand

When you take out a home loan in New Zealand, you have two main options for how your interest rate is set. A fixed rate locks in a specific interest rate for a set term — typically one to five years. During that period, your repayments stay the same regardless of what happens to interest rates in the market. A floating (or variable) rate moves with the market, usually tracking the Reserve Bank of New Zealand's Official Cash Rate (OCR). Your repayments can go up or down at any time.

Historically, fixed rates have been lower than floating rates in New Zealand, making fixing the more popular choice for owner-occupiers. The one-year fixed rate is the most popular term, accounting for the majority of new home loans. However, the right choice depends on your personal circumstances — how much certainty you need in your budget, whether you plan to sell or refinance, and your view on where interest rates are heading.

Most New Zealand banks offer split mortgages, where you fix part of your loan and leave part floating. This hybrid approach gives you certainty on the fixed portion while allowing extra repayments and flexibility on the floating portion. For example, you might fix 60% of your mortgage for two years and leave 40% floating — benefiting from rate reductions on the floating portion while protecting most of your loan from rate rises.

How the Fix vs Float Calculation Works

This calculator compares the total interest cost of two strategies over the full life of your loan. The fixed scenario assumes you fix for your chosen term at the fixed rate, then switch to the "after fixed" rate for the remaining term. The floating scenario assumes you stay on the floating rate for the same initial period, then move to the same "after fixed" rate for the remaining term.

The monthly repayment for each period is calculated using the standard amortisation formula: payment = P × r(1+r)^n / ((1+r)^n − 1), where P is the principal, r is the monthly interest rate, and n is the number of remaining monthly payments. At the end of the fixed or floating period, the outstanding principal is recalculated and the repayment for the remaining term is computed using the "after fixed" rate.

The total interest figures show you how much each strategy costs in interest over the entire loan term. The difference can be significant — even a 1% difference in rate on a $500,000 loan over 25 years translates to tens of thousands of dollars in additional interest. Use this calculator to run different scenarios with rates your bank has offered you to find the lowest-cost path.

When to Choose Fixed or Floating in NZ

Choose a fixed rate when you want budget certainty and believe rates may rise, or when you cannot afford for your repayments to increase. Fixed rates are particularly valuable for first-home buyers who are stretching their budget and cannot absorb higher repayments. They are also useful if you are on a single income, planning a family, or expecting a period of reduced income.

Choose a floating rate (or a shorter fix) when you expect interest rates to fall, when you plan to sell your property before a fixed term expires, or when you want the flexibility to make large lump-sum repayments without break fees. If the Reserve Bank is in an OCR-cutting cycle, staying floating or fixing short-term means you will benefit from rate reductions as they flow through. Breaking a fixed mortgage early can result in substantial break fees — sometimes tens of thousands of dollars — so it is important to consider your plans before committing to a longer fixed term.