How to manage higher home loan interest rates

3-4 minute read

Interest rates have risen over the past few years. So, how might this impact you and what steps could you take to manage your home loan?

Why have interest rates increased?

With increases to inflation, it’s not surprising that prices have increased across the board. Along with higher interest rates, the cost of borrowing money has also increased and this can be an understandably concerning time as a home owner, especially if this is your first experience of home loan interest rate increases. There are many reasons why interest rates rise and fall, but two of the biggest are: 

  • Changes to the Official Cash Rate (OCR), the Reserve Bank of New Zealand’s (RBNZ) main tool to control inflation
  • Changes to wholesale interest rates, which banks and financial institutions charge each other to borrow large sums of money over a fixed term – these affect the interest rates that banks like ANZ can offer customers. 

In recent years, inflation has increased rapidly, prompting the RBNZ to lift the OCR. This increases banks’ borrowing costs, which is why home loan interest rates have risen too. 

Tips for managing your home loan

Look at your repayments

If you’re looking to reduce interest costs, consider whether you could make repayments fortnightly instead of monthly. This means you’ll repay slightly more over the year, as you’ll be paying the equivalent of one extra month. 

If you’re able to make an extra lump sum repayment, this reduces interest costs too.

Review your loan structure

Getting your home loan structure right is a great start. Depending on your individual circumstances, with a mix of loan types, you could pay less overall interest, potentially shaving years off your loan. Examples include:

  • Mix of different fixed rate periods
  • Mix of fixed, floating or flexible interest rates.

So, if you’re about to take out a home loan, or nearing the end of your current fixed term, look at the different ways you could structure your loan to work best for you. 

Plan ahead

If your home loan is about to come off its current fixed-rate period, get a heads-up on what your repayments could be by using our easy calculator.

If your payments will be higher than you’re used to, it’s a good time to look at your budget. What might you change to free up a bit of money for home loan repayments? 

Planning, budgeting and taming other debts are important for your financial wellbeing at any time, but even more so now. Check out our ideas and quick tools that could help.

Lock in an interest rate

If you want more certainty, with ANZ you can lock in an interest rate 60 days before you set up or re-fix your home loan. To lock in a rate, you’ll need to complete a Reserve Rate Agreement. If you cancel or change your agreement, you may have to pay a Non-utilisation Recovery.

Our Home Loan Check In

ANZ Home Loan Coaches can help you set up or restructure your home loan to suit your individual circumstances.

The Home Loan Check In is free, there is no obligation, and it will only take about 15 minutes. Our coaches are happy to talk to you over the phone or in person, whatever suits you.

If you can afford to pay off your loan faster

If you can afford it, paying off your home loan faster could help you pay less interest, especially when rates are higher. 

Arm yourself with a copy of our 'Pay Off Your Home Loan Faster' handbook or attend our free Property Unlocked 'Pay Off Your Home Loan Faster' webinar. 

Important information

 ANZ lending criteria, terms, conditions, and fees apply. Interest rates and fees are subject to change. Read more about our Rates, fees and agreements.

This material is for information purposes only. We recommend seeking financial advice about your situation and goals before getting a financial product. To talk to one of our team at ANZ, please call 0800 269 296, or for more information about ANZ’s financial advice service or to view our financial advice provider disclosure statement see