Over the past few months, the rise and rise of mortgage rates has been precipitous. Last August, the average one-year fixed rate for owner-occupiers on Canstar’s mortgage database was 2.58%. Now it is sitting around 4.6% … and it’s increasing on a weekly basis.
If you’ve been fixed at a low rate for the past two years and are now looking to refinance your mortgage, your new monthly repayments could come as a bit of a shock. Indeed, according to our latest Consumer Pulse report into the nation’s finances, by the end of 2021, homeowners were paying an average of 3.3% on their mortgages. No more!
But while everybody refixing a mortgage will now pay more. Some people will pay more than others…
→ Related article: 7% Mortgage Rate Stress Test: Will Your Mortgage Survive?
Mortgage Rates: Don’t Pay Too Much
Here at Canstar we are firm believers in shopping around for the best value. Be it the best value KiwiSaver, the best value broadband or the best value home loans.
Even when rates were low, there was always a difference of around 1% between the highest and lowest rates offered by different lenders on our database.
That difference between rates hasn’t changed a whole lot. The average spread across fixed rates is still just over 1%. But it’s currently at 1.5% between the highest and lowest 1-year fixed rates. And because average rates are now so much higher, on an average loan, that difference can add up to thousands of dollars in extra mortgage repayments over the term of the loan.
As you can see from the bolded figures below, on an average mortgage on an average NZ home, the difference between the maximum and minimum monthly repayments on a 1-year fixed mortgage is $647. This adds up to a whopping $10,671 difference in interest repayments over the term of the fixed period.
And the figures are more stark if you’re looking at longer fixed terms. Or if you happen to live in Auckland…
NZ Median House Price of $890,000
| Difference with Repayments and Interest Costs – Min vs Average vs Max Rate | ||||||
| Loan amount: $712,000 (based on 80% of the median house price in NZ of $890,000) | Min | Average | Max | Difference Between | ||
| Max and Min | Average and Min | |||||
| Interest Rate | 1 Year Fixed | 4.10% | 4.61% | 5.60% | 1.50% | 0.51% |
| 2 Year Fixed | 4.85% | 5.33% | 6.16% | 1.31% | 0.48% | |
| 5 Year Fixed | 5.75% | 6.13% | 6.45% | 0.70% | 0.38% | |
| Monthly Repayment | 1 Year Fixed | $3440 | $3654 | $4087 | $647 | $214 |
| 2 Year Fixed | $3757 | $3967 | $4342 | $585 | $210 | |
| 5 Year Fixed | $4155 | $4328 | $4477 | $322 | $173 | |
| Interest Costs Over Fixed Period | 1 Year Fixed | $28,962 | $32,587 | $39,633 | $10,671 | $3625 |
| 2 Year Fixed | $68,053 | $74,880 | $86,707 | $18,654 | $6827 | |
| 5 Year Fixed | $197,769 | $211,312 | $222,742 | $24,973 | $13543 | |
| Source: www.canstar.co.nz – 6/05/2022. Median house price based on the REINZ Monthly Property Report (March 2022). Interest rates based on owner occupier fixed home loans on Canstar’s database, based on an 80% LVR and principal & interest repayments. Monthly repayment and interest calculations based on principal & interest repayments made over a total loan term of 30 years. | ||||||
Auckland Median House Price of $1,200,000
In Tāmaki Makaurau an average house will set you back over $300k more than the national average. As a consequence, Auckland mortgages tend to be a lot higher: $960,000, compared to $712,000.
For a mortgage on an average Auckland home, the difference between the maximum and minimum monthly repayments on a 1-year fixed mortgage is $872. That’s $14,387 difference in interest repayments over the term of the fixed period. Or $25,151 extra if you compare average two-year figures.
These are huge figures, which reinforces the importance of shopping around. Even if you don’t want to change lenders, by comparing rates you’ll put yourself in a better position to negotiate a better deal with your existing mortgage provider.
| Difference with Repayments and Interest Costs – Min vs Average vs Max Rate | ||||||
| Loan amount: $960,000 (based on 80% of the median house price in Auckland of $1,200,000) | Min | Average | Max | Difference Between | ||
| Max and Min | Average and Min | |||||
| Interest Rate | 1 Year Fixed | 4.10% | 4.61% | 5.60% | 1.50% | 0.51% |
| 2 Year Fixed | 4.85% | 5.33% | 6.16% | 1.31% | 0.48% | |
| 5 Year Fixed | 5.75% | 6.13% | 6.45% | 0.70% | 0.38% | |
| Monthly Repayment | 1 Year Fixed | $4639 | $4927 | $5511 | $872 | $288 |
| 2 Year Fixed | $5066 | $5349 | $5855 | $789 | $283 | |
| 5 Year Fixed | $5602 | $5836 | $6036 | $434 | $234 | |
| Interest Costs Over Fixed Period | 1 Year Fixed | $39,050 | $43,938 | $53,437 | $14,387 | $4,888 |
| 2 Year Fixed | $91,757 | $100,962 | $116,908 | $25,151 | $9,205 | |
| 5 Year Fixed | $266,655 | $284,915 | $300,326 | $33,671 | $18,260 | |
| Source: www.canstar.co.nz – 6/05/2022. Median house price based on the REINZ Monthly Property Report (March 2022). Interest rates based on owner occupier fixed home loans on Canstar’s database, based on an 80% LVR and principal & interest repayments. Monthly repayment and interest calculations based on principal & interest repayments made over a total loan term of 30 years. | ||||||
Compare with Canstar for the Cheapest Mortgage Rates
But while the cheapest interest rates are important. When looking for the best mortgage, you do need to look at more than just interest charges. When Canstar compares and rates mortgages and mortgage lenders, our expert researchers look at each home loan and awards points for the array of features it offers and its comparative price, which includes rates and fees.
The best products then receive our 5-Star Ratings for Outstanding Value. We place a lot of importance on our ratings, which is why the comparison grids below are sorted first by Star Rating, highest to lowest. However, if you want to compare by lowest rates instead, just click through to access our full mortgage rate comparison tables.
Best Mortgage Rates for Refinancing
The table below displays some of the 2-year fixed-rate home loans on our database (some may have links to lenders’ websites) that are available for home owners looking to refinance. This table is sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Products shown are principal and interest home loans available for a loan amount of $500K in Auckland. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products. Canstar may earn a fee for referrals.
Compare Cheapest Home Loan Rates
About the author of this page
This report was written by Canstar’s Editor, Bruce Pitchers. Bruce began his career writing about pop culture, and spent a decade in sports journalism. More recently, he’s applied his editing and writing skills to the world of finance and property. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.
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