Fixed rate home loans may be at a 3 year low but they have further to fall according to our analysis.
Since the RBA started cutting rates in November 2011, the major banks have cut their standard variable rates by an average of 116 basis points but the average one-year fixed rates have only fallen by 96 basis points, and the average three-year fixed by 94 basis points.
The lowest 1 year fixed rate is now 4.99% offered by Greater Building Society. But with most analysis predicting more cuts from the RBA, we’re expecting that lenders will continue to cut rates over the next week or so.
Want a finger in each pie? Then consider splitting your home loan between a fixed and variable option. With rates so low, splitting is a great option as you’ll get some benefit if rates fall but no repayment shocks if rates start climbing again. Some lenders will offer you more competitive fixed rates if you fix a larger percentage of your loan. For example, eMoney has a three-year fixed rate of 5.25% but only if you fix up to half the loan.
Who has the best fixed rates?
Surprisingly, when we look at the average fixed rates, it’s the Big Banks appear to have the cheapest fixed rates. The Big Bank 1 year fixed average rate is 5.53% compared with 5.79% for non-bank lenders. But when you compare individual products the Big Banks really don’t compete. The cheapest Big Bank’s 1 year fixed rate loan is the NAB’s Fixed Rate Choice Package at 5.34%. Our database shows there are 8 lenders with rates below this.
But if you’re after the security of a major lender then it is worth considering the subsidiary brands like UBank (owned by NAB) and Bankwest (owned by Commonwealth Bank).
Here’s a look at the top fixed loan rates on the market.
1 year fixed
|Greater Building Society (Ultimate Home Loan Package)||4.99%|
|My Mortgage Freedom (up to 75% LVR)||4.99%|
|iMortgage (up to 75% LVR and maximum 50% fixed)||5.04%|
|State Custodians (up to 50% fixed)||5.27%|
3 years fixed
|My Mortgage Freedom (up to 75% LVR)||5.09%|
|iMortgage (up to 75% LVR and maximum 50% fixed)||5.14%|
|eMoney (up to 50% fixed)||5.25%|
|Greater Building Society (Ultimate Home Loan Package)||5.34%|