14/12/2025
Interest rates, certainty, and sleeping at night
One of the questions I’m asked most (and one I can’t answer as advice) is:
“What mortgage rate should I take?”
My honest response: it depends — but it’s rarely just about chasing the cheapest number.
For context, I’ve personally fixed ~80% of my longer-term debt at 4.99% for five years, because that’s debt I fully expect to hold close to term. That decision wasn’t about forecasting rates. It was about certainty, cashflow visibility, and passing the sleep-at-night test.
A few observations that shaped my thinking 👇
1️⃣ Cheap doesn’t always mean better
Short-term rates feel attractive, especially when the market is convinced cuts are coming. But interest rate cycles have a habit of running further — and lasting longer — than consensus expects. Betting on perfectly timed rollovers is still a bet.
2️⃣ Context matters more than predictions
Your balance sheet, income stability, risk tolerance, and how much uncertainty you can genuinely live with all matter more than a headline rate. Certainty has a cost — but it also has value.
3️⃣ Zoom out on history
A useful anchor:
👉 Over the long term, New Zealand homeowners have typically paid around 6–7% on average mortgage rates.
The ultra-low rates of the 2010s weren’t “normal” — they were the exception, driven by unusual global forces that may not repeat in the same way.
Against that backdrop, rates around ~5% don’t look extreme. They look… fairly ordinary.
4️⃣ Inflation is likely to be stickier than we’d like
Even if inflation cools, the forces pushing prices up — labour constraints, regulation, government debt, geopolitics — haven’t disappeared. That argues for caution when assuming rates will fall quickly and stay low.
5️⃣ Certainty isn’t about fear — it’s about strategy
Locking in longer isn’t saying “rates won’t fall”. It’s saying:
“I value knowing what my repayments are, and I’m comfortable paying a small premium for that clarity.”
That won’t suit everyone — and it doesn’t have to.
Bottom line
There’s no universally “right” rate. But there is a right level of risk for you. If uncertainty nags at you, listen to that signal. If volatility doesn’t bother you, structure accordingly.
Rates come and go.
Stress compounds faster than interest.
This is a personal opinion only, not mortgage advice.
