Cheques and Balances
Forward Fixing: Should You Lock In Your Mortgage Now? | Episode 489
26 May 2026
Transcript generated automatically by AI and may contain errors.
Chapter 1: What is forward fixing and how does it work?
We are back in your life and today we're talking about what the hell's gonna happen with interest rates and whether you should consider fixing your mortgage differently to what you're currently doing. Michael, these OCR announcements, they do pop up from time to time. We want to talk about forward fixing. What the hell is forward fixing?
What the hell is forward fixing, James? Yeah, it's what we call a rate lock. So a rate lock agreement.
You mean one jargon to another jargon.
Yeah, yeah, yeah. I'm here to bust the jargon in RLA. Yeah, rate lock. So when your fixed interest rate is rolling off its terms, let's say I've fixed for two very glorious, very happy years and it's coming to the end of that term and I go, oh, Yeah, I think I want to fix again. You know, give me a little bit more of that fixed rate.
Love stability in my life. Yeah. I had Michael in my life now. I want stability with my mortgage rates. You were just going to say that, hey.
It was like, you know, like interest rates are going up.
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Chapter 2: What are the implications of rising interest rates for borrowers?
We can see interest rates are going up. Everyone's predicting interest rates are going up. There's two interest rate hikes priced in already, fully priced in for the end of the year. Fully priced. Fully priced. You know what that means? It's like, well...
market thinks it's going to happen probably going to happen um so if your rate's rolling off like august september this year you might be going oh i think it's going to be high by then is there anything i can do and most people default to like okay maybe i should break my loans now pay a little bit of like a higher interest rate sooner uh or perhaps even pay some break costs as well um what you can do is ford fix the interest rate so i can go right
In 60 days' time, I want to lock my interest rate for two years at this rate. And most banks will allow you to do that. Now, each bank does it slightly differently. Some banks are only 30 days. Some banks are 60 days. Some are 45. Some you can pay a fee to rate lock even longer than that.
And on those sweet, sweet commercial loans, James, how long do you think you can lock those interest rates for? Or Ford Fix, how long do you think you can buy that money in advance?
90 days?
12 months.
what 12 months yeah you can buy so much stability you can buy commercial funds 12 months in advance in certain situations they're different banks as well um but you know that just kind of gives you a little bit of stability and like i know what's coming uh and if i think rates are going to rise you can hedge your bets against it why can commercial loans fix so far further in advance than residential loans uh you buy the money right like the residential loan
uh you can you can do it at kiwi bank you pay a fee for it but it's not 12 months yeah why can you do it on commercial and not on resi it's probably just a pain in the ass for the banks to be honest like if you're both if you had a million people buying interest rates a year in advance it's that'd be chaos yeah yeah and you also gotta remember there's like non-utilization fees and stuff like that on the on the rate lock so yeah
Okay, all right. So that's what a forward fix is. What percentage of clients would you say do forward fix?
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Chapter 3: How can you lock in your mortgage rate effectively?
Maybe there was an OCR announcement or something. But no, we're back in the other cycle. So we're doing it as early as possible.
Not as much of a fan of this cycle.
Yeah, it's definitely the more annoying cycle. But look, we know how long interest rate cycles usually last. Your interest rate hikes the last thing anywhere from kind of 12, 18 months usually. Last one was a little bit longer, but there were some kind of unique circumstances prior to that to try and fix that inflation.
So yeah, look, if you do have a rate rolling off, you definitely should be thinking about it.
Yeah, and in terms of those two rates being priced in, I'm just having a look at, like, where rates are at the moment. You'll know this much better than I. I kind of mainly look at the one year as, like, to give me some form of an indication. Looks like rates got to, like, the lowest they got to was, like, about 4.49, did they?
Pretty much. I think maybe there was a couple under that. Not too far under. Yeah.
And now it looks like most are, you know, somewhere around 20 bps more on average.
Yeah.
The long-term rates have gone up a little bit more. That was going to be my next question.
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Chapter 4: What factors influence the duration of rate locks?
You know, if you don't use that money or interest rates fall and you break that rate, you might owe them a bit of cash or a non-utilization fee or something. So you do want to check the terms, check the dates as well. So again,
some banks are like 30 days you can lock some are 60 some are longer than that but you have to pay for those so depending on the bank definitely check like when is the earliest um that you can fix in and then the last one would probably be don't rely on the bank to get in touch with you to lock in your interest rates right um sometimes they email you 60 days in advance sometimes the email goes to your junk box sometimes they don't call you sometimes they do call you just
sit down, have a look at them, note down when they're rolling off, use a duration calculator. So just punch in duration calculator on the internet and punch in like the date that it rolls off, minus 60 days, and then mark that date in your calendar. And then you should be contacting the bank, getting it locked in.
The other thing I'd add is Peck still sends me paper statements. I don't know how to get rid of them. I've turned them all off.
They still get them. Yeah. You must be special, man.
I don't get them. Well, I'm definitely special. Anyway, we're going to wrap it up right there. I think probably one of the most important things is if you have been meeting to talk to a mortgage broker, reach out to Mike and the team at Lighthouse Mortgages. If you've got a broker you work with, just make sure you're getting in touch to plan these things in advance.
Because as we know, 2026 has got some pumps on the road. Yeah, absolutely. All right, wrap it up there. Please make sure to like, review, subscribe, and we'll catch you next time.
Cheers.
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