Kiwi home owners unlikely to investigate benefits of ‘mortgage splits’

Doing the mortgage splits has real benefits for homeowners who learn how.

But mortgage brokers say many haven’t learnt the art of splitting their home loans over different fixed and floating periods.

Instead they just stick their whole mortgage on a single fixed rate loan. Banks have just under 625,000 floating rate mortgages on their books, and just over 900,000 fixed rate mortgages, adding up to an eye-watering $228 billion of home loans.

Just how many homeowners are doing the mortgage splits is unclear, but groans of pain from people who fixed their home loans only to see rates drop to historic lows show some aren’t.

The Banking Ombudsman has seen a spike in complaints over mortgage break fees which banks charge to borrowers who want to break fixed term loans and refix at a lower interest rate.

It’s a sign, say brokers, of an unsophisticated mortgage market in which too many people make no attempt to spread interest rate risk. Loan Market’s Karen Tatterson says first-home buyers don’t often split their mortgage. ‘‘A lot will just fix it all for a year until they get used to making repayments.’’ Most want certainty their mortgage repayments won’t go up, if interest rates do.