After RBA’s record low rate cut demand for fixed rates goes up

After the RBA announced a record low cash rate of 2% last week, the demand for fixed rate home loans has seen a rise. With borrowers keen to take advantage of the rate cut, Mozo saw a huge lift of 350% in visits to its fixed rate loan pages last week compared to the previous month.

  • See if your lender has passed on the full rate cut in our comparison table here.

Even though variable rates have gone as low as 3.98% with most lenders passing on the full 0.25% cut, fixed rates are even lower.

Mozo data shows that in May 2013, the best three year fixed rate was 0.24% higher than the best variable, while today, a popular three year fixed loan can be found for just 3.95%.

“With fixed rate loans closing the gap on variable rates, the appeal of locking-in your loan for three years or more has grown considerably since Tuesday.”

“With interest rates likely to stay on hold in the coming months, now could really be the time to fix and reap the savings,” said Mozo Director, Kirsty Lamont.

Monthly repayments on the lowest three year fixed rate of 3.95% would be $1,575, while for the lowest variable rate loan (3.98%) the figure comes to $1,582 per month. Although it is only a difference of $7, that amount could be a lot higher if we see rates rise before May 2018.

Mozo’s list of lenders who have passed on the rate cut has grown slowly since Tuesday when the RBA first announced the new cash rate. However, ANZ is the only Big 4 bank to pass on the full 0.25% to its variable home loan customers, while the other three banks haven’t reduced rates by the whole 0.25% amount.

“With funding costs low, there is really no reason why lenders shouldn’t be passing on the full 25 basis point discount,” said Lamont.

Lamont explained borrowers need to make sure their lender is passing on discounts to existing customers and not just keeping the best deals for new customers.

“Some lenders are holding off announcing the discount for existing customers, so check whether your lender is cutting rates and when you’ll be seeing lower repayments,” said Lamont.


Home loan comparisons on Mozo - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
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    Initial monthly repayment
    1.85% p.a.variable for 24 months and then 2.25% p.a. variable
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    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
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    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

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  • placeholder
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.32% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

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  • placeholder
    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required. Winner of three Mozo Expert's Choice Awards for 2021.

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  • placeholder
    Variable Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Comes with Visa debit card and the ability to use digital wallets; Apple and Google Pay. 25% deposit required.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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