Fixed vs Floating: Which Mortgage Rate Works Best in 2025?
- Stephen G
- Oct 6
- 3 min read
Updated: Oct 7
Disclaimer:The information in this article is for general guidance only and does not constitute financial advice. finpla. connects users with licensed mortgage and financial professionals who can provide personalised advice based on your situation.
Should you fix or float your mortgage in 2025? Learn the pros, cons, and what changing OCR rates mean — plus how finpla. connects you with trusted mortgage experts across New Zealand for tailored financial advice.
The Big Question for 2025: Fixed Vs Floating?
With the Reserve Bank cutting the Official Cash Rate (OCR) to 3.00%, many New Zealanders are wondering whether to lock in a fixed rate or stay flexible on a floating rate.
Both options can be beneficial — but the right choice depends on your personal goals, current loan, and comfort with rate changes.
(This article offers general guidance only — for personalised advice, speak with a qualified mortgage expert.)
How the OCR Shapes Mortgage Rates
The OCR is the benchmark rate set by the Reserve Bank of New Zealand that influences borrowing costs across the economy.
When the OCR drops:Â Mortgage rates tend to fall.
When it rises:Â Mortgage rates usually increase.
The recent OCR reduction was designed to make borrowing more affordable — but how much that affects you depends on your mortgage structure.
Fixed Mortgage Rates: Stability in Uncertain Times
Advantages
Predictable repayments for 1–5 years.
Protection from potential rate rises.
Simplifies budgeting and financial planning.
Drawbacks
You won’t benefit if rates fall further.
Early refinancing may trigger break fees.
In 2025, fixed mortgage rates are up to 2.5% lower than they were in 2022–23, making them appealing for borrowers seeking certainty.
(Always confirm break fees and long-term impacts with a licensed mortgage advisor.)
Floating Mortgage Rates: Flexibility with Risk
Advantages
Easier to make extra payments anytime.
You benefit immediately from OCR cuts.
Great if you plan to sell or refinance soon.
Drawbacks
Rates can rise quickly if markets change.
Repayments may fluctuate month to month.
Floating rates are generally higher than fixed ones, but if OCR cuts continue, they may offer short-term savings.
(This is general information, not a personalised recommendation.)
So, Fixed vs Floating Option Works Best in 2025?
There’s no single best answer, but here’s what finpla.-connected experts are seeing across New Zealand:
Situation | Common Approach (General Guidance) |
First-home buyers | 1–2 year fixed term for short-term stability |
Investors | Mix of fixed and floating to balance certainty and flexibility |
Homeowners nearing refinance | Short fixed term or split loan structure |
Borrowers planning to sell | Floating for easier exit flexibility |
(Every situation is unique — finpla. connects you with experts who can provide tailored, licensed advice.)
How finpla. Helps You Choose the Right Path
finpla. connects you with trusted mortgage brokers and financial experts across New Zealand who can:
Compare Fixed vs Floating options from multiple lenders.
Model repayments under different OCR scenarios.
Help you refinance or refix for better flexibility.
Guide you through the entire process.
Instead of guessing alone, finpla. connects you with professionals who can provide clear, regulated advice — so you can make confident decisions.
Quick Recap: Fixed vs Floating in 2025
Type | Best For | Key Benefit | Key Risk |
Fixed Rate | Long-term stability | Predictable repayments | Missed savings if rates fall |
Floating Rate | Short-term flexibility | Immediate OCR benefits | Potential repayment increases |
Ready to Review Your Mortgage?
With OCR cuts creating opportunities, now’s the perfect time to explore your options.
💬 Ask Finpla a question now — we’ll connect you with a qualified mortgage broker near you for personalised advice.