The 18-year-old, whose current deal ends next summer, is currently gaining first-team experience at Watford during a loan spell which expires in January. However, Mutch, who was loaned out to Hereford and Doncaster last season, is keen to remain at St Andrew's on a long-term basis.
Mutch told the Birmingham Mail: "My contract finishes at the end of the season and we are talking to try and sort something out now.
"Hopefully that will be done as I'd love to re-sign. I don't plan to on going anywhere else."
He added: "Then it is down to the manager whether he keeps me or not - or I go out on loan again to keep learning and improving."
Mutch was a product of the Derby academy but joined Birmingham in the summer of 2007.
He became the second youngest Birmingham debutant after Trevor Francis when appearing in a League Cup tie at Southampton in August 2008.
Mutch then had to take a complete break from the game and needed surgery to correct the excessive strain being placed on the growth plates in his legs.