Half of 2025 mortgage refixes complete, BNZ says
BNZ chief economist Mike Jones (pictured) says the “Year of the Refix” is evolving faster than expected, with borrowers starting to move away from ultra-short mortgage terms as the Reserve Bank (RBNZ) continues its rate-cutting cycle.
“At the start of the year… over 80% of mortgage borrowings were set to experience a rate reset this year. That was the highest in 13 years, earning 2025 the ‘Year of the Refix’ tagline,” Jones said.
The reset has also been described by other advisers as “The Great Refix,” with nearly $200 billion in mortgages set to roll over by September. Katie Wesney of enable.me says this represents “the biggest mortgage repricing opportunity New Zealand has ever seen.”
Peak short has passed
Jones noted that November 2024 was the high point for extreme short-term mortgage positioning.
“The share of new borrowings on floating and six-month fixed terms has reduced a little, and there’s been snatches of increased interest in two-year fixed terms,” he said. “Consequently, the share of new mortgage borrowing on terms of 12 months or less has fallen from a high of 94% in November, to an average of 71% over the three months to June.”
Switching providers at record levels
The wave of refixing has also encouraged borrowers to shop around.
“A record amount of new residential lending in June – 30% – was attributable to mortgage switching,” Jones said.
At the same time, the average mortgage rate being paid has fallen quickly as borrowers roll off older, higher rates.
“The average paid rate was 5.66% in June, down from a 6.39% peak. It’s still got a ways to go. We estimate a decline to around 5% by the end of the year,” Jones said.
Banks have already lowered popular fixed rates by as much as 1.95 percentage points from their peaks, but Wesney notes many households haven’t seen those savings yet.
Borrowers focusing on the cycle, not just lowest rates
Jones said the broader shift is toward a more balanced mortgage book.
“The share of outstanding fixed-rate borrowings with remaining terms of six months or less has declined from the highly concentrated 44% as of January, to 36% as at June,” he said.
Jones explained that fixing behaviour is now less about chasing the lowest upfront rate and more about positioning for the interest rate cycle.
“Now, borrowers – in aggregate – appear much more inclined to absorb what might be unfavourable upfront cost relativities to position themselves to potentially benefit long-term as we move through an interest rate cycle,” Jones said.
RBNZ signals more easing ahead
The latest RBNZ decision has reinforced that outlook.
“The Reserve Bank… cut the official cash rate (OCR) by 25bps to 3%, the seventh cut this cycle. The cash rate is now 2½ percentage points below the peak,” Jones said.
“Where we were surprised – in a good way – was with the bank’s new-found conviction that additional cuts beyond this will be required… Our forecast trough in the OCR has been pulled down by another 25bps to 2.50%, by November,” Jones said.
He added that borrowers’ gradual shift toward longer terms “appears consistent with this” but cautioned against expecting a rush.
“Not while the RBNZ maintains a bias to lower interest rates further, the economy remains weak, and the risk of rate hikes remains a long way off,” Jones said.
To read Jones’ full analysis, see the BNZ blog.
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