Fix Your Mortgage Now - or Wait?
If your mortgage is coming up for renewal, there’s a good chance you’re feeling stuck. Should you fix your mortgage now… or wait? It’s one of the hardest decisions homeowners face!
On one hand, you’ve probably heard things like:
“Rates should be coming down soon.”
“Economists expect easing eventually.”
But on the other hand, you’re seeing:
Fixed rates are still a lot higher than a few years ago
Conflicting advice online
Friends and family all doing different things
In this post, our mortgage broker Craig gives us a new way of framing the question - to help you approach the situation calmly and practically without trying to predict the future.
WHY THE DECISION IS SO STRESSFUL
Most people aren’t trying to ‘beat the market’ - they’re just trying to avoid getting it wrong. As a mortgage broker, the common fears I hear include:
Locking in just before rates fall
Waiting too long and missing the best pricing
Choosing the ‘wrong’ fixed term
Making a decision they’ll regret for years
The problem is that mortgage interest rate decisions often get framed as a timing exercise, when they’re actually a risk management exercise.
WHY WAITING CAN BACKFIRE
The ‘perfect moment’ is almost always only obvious in hindsight.
With news headlines and economists suggesting rates may ease in future, waiting feels both logical and very tempting. After all, no one wants to lock in at the ‘top’.
But remember, fixed mortgage rates are not set purely by the current OCR, economists’ forecasts or headlines. What actually influences fixed mortgage rates are things like wholesale funding costs (especially swap rates), expectations about where these costs/rates might go, your bank’s risk appetite, competition with other banks, etc. Rates can change even when nothing “official” seems to have happened.
The real decision isn’t:
“Should I fix now or wait?”
It’s actually:
“How much certainty do I want with my mortgage, and how much risk can I comfortably carry?”
Once you reframe the question this way, the noise falls away.
THE CERTAINTY VS FLEXIBILITY TRADE-OFF
Every fixed-rate choice sits on a spectrum. (There’s no ‘correct’ position on this spectrum - only what best suits you.)
On one end: Fixing = Opting for Certainty
You know your mortgage repayments
Budgeting is easier
Less emotional stress
Less exposure to future rate increases
The Trade-Off: You give up flexibility to move if rates fall.
On the other end: Waiting = Opting for Flexibility
You can respond sooner if rates drop
Shorter commitments
Potential upside if conditions improve
The Trade-Off: You carry more risk if rates rise or stay high.
Without a fixed rate in place, your mortgage will remain on a variable rate that is currently around 1.34% higher than 1-year fixed rates. That higher rate immediately increases your interest costs and your mortgage repayments, and in some cases, borrowers later discover they have paid more in total interest than if they had re-fixed at the time the decision was being considered.
MAIN STRATEGIES FOR HOMEOWNERS
Let’s look at the main strategies borrowers use, and who they suit.
1. FIXING SHORT (6–12 months)
This approach might suit if you:
Value flexibility
Believe rates may ease further
Can handle mortgage repayment uncertainty
Want to reassess your mortgage sooner
Pros
You can be more responsive to future rate changes
Usually cheaper than long-term rates (at least initially)
Less long-term commitment
Cons
You’ll be revisiting this weighty decision again sooner
More risk exposure if the rates rise (or don’t fall as expected)
More emotional energy required
2. FIXING LONG (3–5 years)
This suits people who:
Prioritise certainty and stability
Need predictable mortgage repayments
Would struggle if rates rose further
Prefer set-and-forget solutions
Pros
Mortgage repayment certainty
Protection from future increases
Mental breathing room
Cons
Less benefit if rates fall
Less flexibility if circumstances change
Often higher headline rates
Break fees can be charged if you pay the loan off earlier
This isn’t pessimistic — it’s risk management.
3. SPLITTING YOUR MORTGAGE
Many borrowers choose to split their loan across multiple fixed terms.
This suits people who:
Want balance rather than certainty or flexibility alone
Accept that no one can predict rates perfectly
Want to spread risk over time
Pros
Reduces regret risk
Smooths future refix dates
Avoids “all-in” decisions
Cons
Slightly more complex
Requires a bit more thought up front
Professionally, this is often one of the most robust strategies.
DON’T ‘DO NOTHING’
One of the most common - and costly - mistakes is simply letting a loan roll over.
When you do this, you’re essentially choosing a higher default rate, and you also lose the window of opportunity to secure a better deal for your mortgage before the higher costs kick in.
A FRAMEWORK FOR DECISION MAKING
Don’t let forecasts or headlines about the OCR drive your mortgage decision.
A better approach is to ‘stress-test’ your budget rather than trying to predict the future.
So, instead of asking:
“Will rates drop next year?”
Ask:
Can I afford my mortgage repayments if rates stay where they are?
What if they rise slightly?
What if they fall more slowly than expected?
If your structure works in all these scenarios, you don’t need to be right about the market - you just need to be prepared.
THE QUESTIONS THAT ACTUALLY MATTER
Instead of trying to guess the market timing, focus on your own reality. Ask yourself how stable your income is, how sensitive your budget is to change, and whether you value certainty or flexibility more right now. Most importantly, consider which you would regret more: locking in too early, or not locking in at all?
WHAT A “GOOD” MORTGAGE DECISION LOOKS LIKE
A good decision isn’t one that copies what someone else is doing, nor one that turns out to be the cheapest in hindsight or perfectly times the market.
A good decision is simply one that fits your financial reality, lets you sleep at night, and still works even if the forecasts change. That’s a much healthier standard to aim for.
NEXT IN THIS SERIES…
This post builds on our previous analysis of why banks priced rates the way they did in the last 6 months, and our explanation of what economists are now predicting and why their forecasts change. In future posts, we’ll cover:
Which fixed terms may suit different situations
How to split loans effectively
How to negotiate when re-fixing your mortgage
How to reduce repayment shock
BROKER’S FINAL THOUGHT
There is no perfect time to fix a mortgage… but there is a well-structured way to manage uncertainty.
If you stop trying to outguess the future and instead focus on risk tolerance, cashflow resilience and sensible structure, you’re already ahead of most borrowers.
Due to re-fix soon and unsure how to apply this to your own situation? A conversation with our mortgage broker Craig can often bring more clarity than weeks of reading headlines.
YOU MIGHT ALSO LIKE:
• What are Swap Rates?
• What the heck’s happening with interest rates?
• Paying a mortgage off faster (for realists)
Our blog is not intended to be taken as personal advice
and is for informational purposes only.
Before acting on this information, contact WealthHealth mortgage brokers
to ensure it is suitable for your circumstances.