Mortgage refix wave brings savings and strategy choices
Katie Wesney (pictured), a financial adviser at enable.me, says New Zealand is entering what she calls “The Great Refix” – a once-in-a-decade mortgage-rate reset where nearly $200 billion in home loans are floating or fixed for six months or less.
“Picture this – hundreds of thousands of Kiwi households are about to play the highest-stakes game of mortgage musical chairs in New Zealand history. The prize? Thousands in savings on their home loan. The catch? The music could stop at any moment,” Wesney said in an opinion piece for Stuff.
Since August 2024, the Reserve Bank has cut the official cash rate (OCR) from 5.5% to 3%. In its latest monetary policy decision, RBNZ said recovery stalled as spending slowed, with CPI at 2.7% in June and likely 3% in September. It noted “significant spare capacity” in the economy, while a 4-2 vote to cut showed growing divisions on the committee.
Banks have already lowered popular fixed mortgage rates by 1.5-1.95 percentage points from their peaks. For many borrowers still locked into older fixed rates, Wesney said the savings haven’t flowed through yet – but they soon will.
“Reality check: As of March 2025, 52.9% of all mortgages – just under $200 billion – will be ready to refix by September; the biggest mortgage repricing opportunity New Zealand has ever seen,” Wesney said.
Three strategies advisers can share with clients
Wesney urged households to have a clear plan ahead of their refix – and advisers are well placed to guide them through the options.
Act early
“Don’t wait for your bank to contact you. In some cases, you can break a fixed mortgage early, pay a small break fee, and refix at today’s lower rates,” she said.
Example: a $500,000 mortgage at 6.5% dropped to 4.9% saves $8,000 a year. Even with a $1,000 break fee, the borrower could still come out ahead.
Spread your risk
“You don’t have to put your whole mortgage on the same term,” Wesney said. “Some borrowers choose a mix of short, medium, and longer terms. The right balance depends on your risk tolerance, cash flow, and future plans – there’s no one size fits all answer.”
Negotiate with confidence
“Your bank knows most customers never switch,” Wesney said. “Use that to your advantage: ‘I’m reviewing my options before I refix. What’s your best offer?’”
Mortgage advisers can shop the market on behalf of clients, often securing sharper rates or cashback offers that may not be publicly advertised.
Mortgage traps to avoid
Wesney highlighted three common mistakes in the current market.
Set and forget
“Don’t automatically go short term,” Wesney said. “Rates could rise again in a few years – or they could fall further. Nobody has a crystal ball, so aim for a balance that works for your situation.”
Chasing the shiny rate
“Compare apples with apples,” Wesney said. “Some low mortgage rates require high equity. Cashback offers can be worth thousands, but make sure they don’t lock you in longer than you want.”
Paralysis by analysis
“If you can save thousands now, refix,” Wesney said. “Waiting for the ‘perfect’ rate might cost you more in the long run. Peace of mind is priceless.”
Busting mortgage myths
Wesney said it’s important to separate fact from fiction in a falling rate environment.
- “Always fix short-term when rates fall” → Myth. “Fixing part of your mortgage longer can protect you if rates rebound.”
- “Break fees are always bad” → Myth. “If your interest savings beat the fee, it’s worth considering.”
- “Banks never negotiate” → Myth. “They will, especially if you or your broker ask.”
Revolving credit can offer big wins
Wesney noted that revolving credit remains a powerful but underused tool.
“If you have savings and discipline, a revolving credit home loan can slash interest to zero on the portion that is fully offset,” she said.
Example: $50,000 savings against $50,000 revolving credit at 5% = no interest and no principal repayments.
“It can also give you an additional goal to clear – a single, visible balance to attack, which can be surprisingly motivating,” Wesney said. “Used correctly, it’s a tool that can save you thousands over time by accelerating your mortgage paydown.”
She cautioned:
- “Keep it intentional (floating rates cost more).”
- “Don’t link a credit card.”
- “Treat it as a target to clear or an emergency buffer, not a pot to dip into at will.”
Looking beyond the rate cut
Wesney said now is the time for borrowers to strengthen their wider financial position – and advisers can play a key role in helping clients redirect savings, build buffers, and review their overall financial plans.
- “Pay it down faster: Direct your interest savings into extra principal payments.”
- “Build your emergency fund: three-six months’ expenses.”
- “Review your finances: Insurance, will, and overall plan.”
- “Position yourself for choice: If you own multiple properties with enough equity, consider spreading lending across different banks. This can increase flexibility and negotiating power in future – especially if lending rules tighten again.”
Bottom line: act thoughtfully
“This isn’t just about a lower home loan rate. It’s about using a rare financial reset to strengthen your whole position,” Wesney said.
She urged borrowers to seek advice before making decisions.
“Everyone’s circumstances are different, so get professional advice that considers your unique situation before making big decisions,” Wesney wrote on Stuff. “Your bank, a mortgage broker, or financial adviser can help you weigh the pros and cons in the context of your wider financial goals.
“The winners won’t be the ones who perfectly guessed the bottom of the market – because no one has a crystal ball. They’ll be the ones who acted thoughtfully, avoided the traps, and made the savings work for them.
“The music will stop. Will you be in a seat you chose – or the one you’re stuck with?”
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