Choosing a mortgage rate in 2026 starts with your budget, plans and tolerance for changing repayments. The lowest advertised rate today may come with a fixed period or conditions that do not suit what happens next in your life.
Information date: 10 September 2026. The scenarios below are decision tools, not a forecast of the OCR or a claim about today's cheapest lender.
Fixed, floating or a combination?
| Structure | Main benefit | Trade-off |
|---|---|---|
| Fixed | Your interest rate stays unchanged during the agreed fixed period. | Extra repayments may be limited; leaving early can cost money. |
| Floating | More freedom to repay lump sums or change the loan. | The rate and required repayments can rise or fall. |
| Split | Different portions can serve different needs. | More expiry dates and conditions to manage. |
The fixed period is separate from your total repayment term. A two-year fix does not repay a 25-year mortgage in two years. Sorted explains these structures and their main trade-offs.
When rates are rising: what can your budget absorb?
If your floating rate increases, your repayment requirement can increase too. Fixing a portion can protect that part of your budget until its expiry. This matters particularly when there is little monthly surplus or a planned period of reduced income.
Ask for repayments at the offered rate and at higher scenarios. Choose a level of certainty you can afford, while allowing for an eventual refix. A longer fix gives longer protection, but may be a poor fit if you expect to sell or repay a large amount sooner. ANZ's fixed-loan guidance explains the protection and repayment restrictions.
When rates are falling: count the cost of waiting
Floating or a shorter fix may let you access a lower rate sooner if lenders reduce their offers. However, the size and timing of any reduction are uncertain. Floating rates are generally higher than fixed alternatives, so flexibility can carry an immediate cost. See ANZ's floating-loan features.
On an unchanged $500,000 balance, paying 0.75 percentage points more for three months costs roughly $938 extra interest: $500,000 × 0.0075 × 3 ÷ 12. This excludes principal reductions, fees and daily interest timing. It is not a quoted rate or repayment calculation.
Any later saving needs to recover that waiting cost. Compare alternatives over the same period, and include a scenario where the hoped-for reduction never happens. A lower future rate does not automatically make waiting cheaper overall.
The case for splitting a loan across terms
You can ask about fixing portions for different periods, or combining fixed and floating lending. For example, an illustrative $600,000 loan might have $300,000 fixed for one year, $250,000 fixed for two years and $50,000 floating for planned extra repayments. This is an example to discuss, not a recommended allocation.
Staggering expiry dates means the whole balance does not reset on one day. Only part benefits immediately from falling rates, and only part faces the first higher refix. Size any floating portion around money you realistically expect to repay, rather than an arbitrary percentage.
A split does not guarantee savings. Multiple fixed expiries can complicate refinancing: moving lenders when one portion expires may mean breaking another. Ask for the conditions on each portion and keep an expiry calendar.
Questions to work through before choosing
- What is comfortably affordable? Allow for essentials, emergency savings and a higher-rate scenario.
- Will your income change? Consider parental leave, retirement, variable earnings or reduced hours.
- Will you move, sell or renovate? Match fixed periods to likely milestones.
- Are lump sums likely? Check the exact allowance, timing and fees for extra repayments.
- What does changing early cost? Obtain a current break-fee quote and check cashback repayment, legal and discharge costs.
- What happens at expiry? Confirm the default rate, refix process and any advance rate-lock conditions.
Fixed does not always mean no extra repayments: lender allowances differ. Consumer Protection explains that a lender may charge a contractual break fee to recover costs or losses when you leave a fixed mortgage early.
Bring your offers and your plans together
Gather balances, expiry dates, repayments, written lender offers and expected changes to your finances. Ask CorePath to compare suitable structures and their total costs. If moving banks is an option, read our refinancing guide; for budgeting, explore our mortgage calculators.
Sources checked
General information only, not personalised financial advice. Rates, fees and lender conditions can change. Obtain advice and current written offers for your circumstances before choosing a mortgage structure.