Could a small switch in structure save thousands and shave years off a mortgage?
This guide shows how borrowers in New Zealand can look past headline offers to assess the true cost of a home loan. It highlights one‑year fixed specials — around 4.49% at the big banks and roughly 4.39% at some smaller lenders like TSB as at mid‑November 2025 — and notes that floating options are often higher than advertised fixed rates.
Readers will learn how to weigh interest, fees and features, and when mixing fixed and floating terms improves flexibility and certainty. The piece also explains how advertised rate deals differ from negotiated pricing and what the big five banks do differently from smaller lenders.
This short primer sets out practical steps to benchmark a mortgage against your equity, goal years and repayment plan before you act. Always verify current pricing with lender pages or MortgageRates.co.nz.
What borrowers in New Zealand need right now: market context and intent
Borrowers face a window where short fixes look attractive as policy settings ease. The stimulatory OCR backdrop and talk of a further cut to 2.25% have pushed many to consider short‑to‑medium fixed terms.
As at 14 November 2025, one‑year specials sit around 4.39% at TSB and roughly 4.49% at big banks. With about 90% of mortgages fixed, mortgage rates and advertised specials matter — but so do the banks’ assessment tests and lending policies.
Banks typically stress‑test affordability near 7.50% and favour borrowers with a 20% deposit for special pricing. That means households should budget beyond today’s headline interest rate to stay resilient through cycles.
Owner‑occupiers and investors will weigh certainty versus flexibility. A split of fixed and floating options can protect cash flow now, while keeping capacity to benefit if interest rates fall later.
Compare loan rates NZ: big five banks versus the wider market
A borrower’s best move can depend more on lender type than on a single advertised interest figure. The big five — ANZ, ASB, BNZ, Kiwibank and Westpac — account for roughly 94% of the market and run deep product suites that often push competitive 1–2 year specials.
As at november 2025, many big banks listed one‑year offers near 4.49% while TSB sat at about 4.39% for a 1‑year. These advertised rates usually require at least 20% equity and are drawn from lender pages and MortgageRates.co.nz.
Standard floating and revolving facilities typically trade 0.5%–1.5% above specials, so borrowers should treat them as tactical tools rather than the core balance. Fees, turnaround times and credit appetite matter as much as a small rate gap.
When a non‑major posts a sharper 1‑year, the big banks may match for strong profiles. Documenting multiple quotes helps borrowers negotiate and pick the lender that fits their mortgage and long‑term plan.
Fixed rate vs floating rate vs revolving credit: which interest structure suits your situation
Selecting an interest structure balances the need for certainty with the chance to save if interest rates move down. Fixed rate terms give predictable repayments for the chosen term and suit borrowers who need steady cash flow or have small buffers.
Floating rate options usually cost more than short fixed today — often over 1% higher than a one‑year fix — but they let people repay without break fees. That flexibility works well for those expecting a bonus, sale proceeds or a lump sum within a year.
Revolving credit or offset facilities act like a large overdraft secured by the home. Keeping savings against the balance reduces daily interest, but the facility needs disciplined cash management to deliver benefits.
A common idea is to fix most of the mortgage for one to two years and keep 5–10% on floating or revolving. This blended approach covers essential repayments and leaves room to make extra repayments without break costs.
Term-by-term comparison: 6 months, 1 year, 2 years and beyond
Picking a term shapes repayment certainty and exposure to future interest moves. Short fixes give flexibility; longer fixes buy peace of mind.
As at 14 November 2025 the market snapshot showed key points. The lowest 6‑month fixed was 4.75% (Kiwibank). One‑year fixes sat as low as 4.39% (TSB) with big banks around 4.49%.
Two‑year fixed pricing dipped to 4.45% (Westpac), while three years and longer sat higher — 3‑year at about 4.75% and 4–5 years near 4.99% (BNZ and Westpac). Big banks also show floating and revolving facilities above specials.
Short terms cut today’s repayment but mean more frequent refixing. A one‑year term often balances cost with near‑term reset risk. Two years gives a middle ground of cost and certainty. Four‑ to five‑year fixes suit those wanting multi‑year stability, though early repayment fees may apply if a fixed term is broken.
For a home loan with variable income, splitting across one and two year terms with a small floating slice can smooth repayments. Always check current interest rates, fees and T&Cs on the day of application.
Advertised rates versus negotiated rates: how a mortgage adviser can shift the dial
A short conversation with a broker can turn a public rate into a private saving. Banks list advertised rates as a starting point, but the final mortgage offer often reflects profile, equity and timing.
A mortgage adviser with strong volume and relationships may secure pricing or cash contributions not shown online. For borrowers under 20% deposit, standard pricing can be materially higher than specials, so an adviser will outline ways to improve equity or structure to qualify for a better interest rate.
Simple, low‑risk files win the biggest discounts: clean credit, stable income and standard property types. If a bank sits above a competitor at the same term, politely ask for a match and present the competing offer in writing.
Non‑rate concessions such as fee waivers or cashback can offset a small gap in headline numbers. Timing and clear disclosure of your situation help advisers push for the best outcome, but not every file will get a discount — asking professionally often pays off.
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Cash back offers vs the “best interest rate”: weighing real money trade‑offs
When a lender offers cash to refinance, weigh that instant amount against years of interest savings. For many borrowers the decision hinges on the expected holding period and the mortgage balance.
Typical cash ranges help. For a $300k–$400k refinance the cash might be $2,400–$3,600. At $500k–$600k expect roughly $4,000–$5,400 and at $800k–$900k around $6,400–$8,100. These amounts vary by lender terms and the borrower’s profile.
Use a simple dollars‑and‑cents breakeven: multiply the rate gap by the loan balance and compare to the cash amount over your likely ownership term. If refinancing within 1–2 years, extra cash can beat a slightly higher interest. Over longer periods a lower rate usually wins.
Also check clawback windows, exit fees, valuation and legal costs. Cash used to cut principal immediately reduces interest and improves future options. Asking a broker for side‑by‑side scenarios helps show the net money effect and the best interest outcome for the borrower.
Bank vs non‑bank lenders: comparing rates, criteria and use cases
Choosing between bank and non‑bank lenders often comes down to trade‑offs in price, policy and proof of income.
Major banks typically offer the sharpest headline rate and wide product choice. They favour files with a 20% deposit and clean credit. For straightforward mortgages this usually gives better interest outcomes.
Non‑bank lenders serve borrowers the majors decline. Self‑employed applicants, recent business owners and those with minor credit marks can win approval more easily. Expect pricing to sit several tenths higher — for example Resimac’s one‑year at about 5.15% versus Westpac 4.49% (roughly 0.66% gap).
New property purchases sometimes get more lenient LVR treatment, and banks may accept some sub‑20% deposits within limits. Still, planning to move from non‑bank to a bank as equity builds can cut interest paid over the years.
Assess the full package: fees, speed, approval certainty and flexibility often matter more than the smallest headline. Always check current interest rates and lender policy on decision day.
Smart comparison strategies to save over the life of your home loan
Splitting your mortgage into staggered terms reduces the risk of one large rate reset and smooths repayments over time.
Keep about 5%–10% on a floating rate or in a revolving credit facility. That lets bonuses and lump sums be paid without early repayment penalties and lowers daily mortgage interest.
Match term choices to life events such as renovations, parental leave or a likely property sale. This preserves optionality and keeps refinancing costs manageable.
Schedule an annual review with an adviser to see if repricing, cashback offers or a tweak in structure could save money. Brokers can often negotiate with the current bank to retain customers.
When interest rates fall, weigh the break cost before switching. Pay lump sums against the highest‑rate tranche first to maximise mortgage interest savings, and use offsets to keep cash working against the balance.
Compare offers on a like‑for‑like basis—same term, fees and timing—and ask the bank to match a visible deal before moving. Even small rate cuts plus disciplined extra repayments could save significant dollars over the life of the home loan.
Next steps to lock in a sharp rate and repayment plan
A short, structured plan can turn research into real savings on a mortgage. Gather payslips, bank statements, liabilities and a recent rates letter so an adviser can act fast.
Use a borrowing calculator to stress‑test repayments under higher interest and set a comfortable target. Shortlist two or three lenders and ask for written quotes for the same term to check rate, fees and any cash offers.
Squirrel is an award‑winning mortgage brokerage with about 1,425 five star reviews on Shopper Approved. Book a chat with a mortgage adviser, confirm key dates and lock in pricing on the day you sign to save time and money.
