The number one question I am hearing from clients right now is this: should I fix my mortgage for one year or two years?
It comes up constantly. People rolling off fixed rates, first home buyers about to settle, investors reviewing their structures. Everyone is asking the same thing, and honestly, it makes sense. We are at one of those points in the cycle where the decision actually matters a lot more than it did 12 months ago.
So let me walk you through how I think about it, what the data says, and how you can apply it to your own situation.
Where rates sit right now
Before you can make a good decision, you need to know what you are actually choosing between. As of mid-2026, most of the major banks have their one-year fixed specials sitting around 4.59% to 4.79%. Two-year rates are slightly higher, generally in the 4.99% to 5.09% range depending on the lender.
That gap matters. Right now, you are paying a small premium to lock in for two years instead of one. Whether that premium is worth it comes down to one central question: where do you think rates are heading?
What the banks are forecasting
Here is where it gets interesting. Most major bank economists are no longer forecasting rate cuts. The conversation has flipped. The Reserve Bank held the OCR at 2.25% at the May 2026 review, and the broad consensus across ANZ, Westpac, and BNZ is that the next move will be upward, not downward.
ANZ has published the most specific numbers. Their forecast puts the one-year fixed rate at around 5.2% by December 2026, rising further toward 5.5% through 2027. They also expect the two-year rate to track a similar path, hitting roughly 5.3% by the end of this year.
That is a meaningful jump from where rates sit today. If those forecasts are anywhere near accurate, someone who fixes for one year now is likely rolling off onto a higher rate in mid-2027 than they are paying today.
So does that mean two years is always the right answer?
Not necessarily, and this is the part most articles skip over.
Two things matter beyond just the rate forecast. The first is certainty. If you fix for two years, you know exactly what your repayments are. You can budget around that. For a lot of first home buyers, that predictability is genuinely valuable, especially in the first couple of years of ownership when you are still getting used to what a mortgage feels like month to month.
The second is your personal situation. Are you likely to need to break or change your mortgage in the next 24 months? If there is any chance of selling, restructuring, or making significant changes, a one-year term gives you more flexibility. Break costs on a fixed mortgage can be painful, and the shorter the remaining term, generally the lower the cost if you do need to get out early.
The case for one year
Fixing for one year still makes sense for some people. If you are highly uncertain about your circumstances, if you expect your income to change, or if you think you might be refinancing soon, the shorter term buys you options.
There is also the argument that banks could be wrong. Forecasts are not guarantees. If global conditions shift, if inflation falls faster than expected, or if the NZ economy softens again, the RBNZ could hold rates lower for longer than anyone currently expects. That has happened before.
Fixing for one year means you review the decision sooner and get another look at the market in 12 months. Some people prefer that.
The case for two years
The rate that’s getting the most traction right now is two years, and here’s why. You are locking in a rate that is still relatively low by historical standards, with the buffer of knowing your repayments for two full years regardless of what happens to the OCR. If the bank forecasts prove accurate and rates do climb toward 5.2% to 5.5%, you would be sitting well below that for the remainder of your term.
The premium you pay today for a two-year rate over a one-year rate is small compared to the potential savings if rates do rise. That is the key calculation. You are not just comparing 4.59% versus 5.09%. You are comparing a known two-year cost against an unknown renewal rate in 12 months.
What about splitting your mortgage?
One option worth considering is fixing different portions of your loan across different terms. For example, half on a one-year rate and half on two years. This approach hedges your position. You get some certainty from the two-year portion, and the one-year portion comes up for renewal sooner, giving you the chance to reprice part of the loan if rates do move favourably.
A lot of borrowers find this reduces the anxiety around making the right call, because you are not betting everything on one outcome.
You can use the loan structure calculator on the NextMove site to check what loan structure may be suitable for your situation.
The honest answer
The honest answer is that there is no universally correct choice here. What is right depends on your situation, your tolerance for uncertainty, and how much weight you put on the current forecasts from bank economists.
What I can tell you is that the market has shifted. Twelve months ago, the question was whether rates would fall further. Today, the question is how fast they will rise. That changes the thought-process for most people, and it is why the two-year rate is getting a lot more attention in client conversations than it was at the start of 2025.
If you want to work through what makes sense for your specific loan, get in touch, and we can book you in a time for a chat. info@nextmoveproperty.co.nz
Chris Thompson – Mortgage Adviser