August home loan snapshot: As interest rates climb the pressure mounts on home owners

couple having a cuppa

The Reserve Bank of Australia (RBA) increased the official cash rate for the third time last month and economists predict there’ll be another 0.50% increase in August.

Several experts from NAB and Westpac predict we will continue to see hikes until February 2023, with a predicted 3.35% cash rate peak.

For now, rates continue rising across the board, and many homeowners at the end of their fixed rate terms are entering a home loan market with no more rates below a ‘2’. In fact, the RBA’s deputy governor warned that homeowners rolling from fixed to variable rates might see a 40% increase in their mortgage repayments.

While that might sound discouraging for those with home loans, the RBA says most households should be able to withstand higher repayments

On the other hand, those looking to become new homeowners might be surprised as recent Corelogic data found that property prices have sharply fallen in the last month.

The report says there was a 1.2% decrease in property prices nationwide. Sydney prices–the most expensive in Australia–dropped by 1.9% over the past four weeks. The last time it dropped this rapidly was more than 40 years ago. Melbourne also dropped by 1.2% and Brisbane by 0.6% over the same period.  

So what do variable rates and fixed rates look like after the RBA hike? Find out below.

The fall of the ultra low fixed home loan rates

The age of ultra low fixed rates is gone. Last year, several fixed rates started with a ‘1’, but now the lowest fixed rates in our database start with a ‘3’.

According to Mozo’s database, the average fixed rates for owner occupiers with an 80% LVR and a $400,000 loan are:

  • 1-year - 4.80% p.a.
  • 2-year - 5.40% p.a.
  • 3-year - 5.75% p.a.
  • 4-year - 6.12% p.a.
  • 5-year - 6.26% p.a.

“Fixed rates are basically out of the market now,” says Mozo’s banking expert Peter Marshall. “They’re going to settle in the area which they are now, which is the 5% - 8% range depending on the term.”

The graph below shows that fixed rates skyrocketed at the start of 2022 and have not slowed down. One can only assume that we won’t see a drop soon.

Recent fixed and variable interest rate movements

We’ve seen increases across all the home loan products in our database. In fact, in the last month, there were 1771 increases in variable home loan products and 2988 in fixed home loan products tracked in the Mozo database. Many of the variable home loan interest rate hikes were in line with the RBA’s new cash rate.

Here are some notable changes from the last month.

Variable home loans

  • Bank of Queensland increased its Economy Variable loan to 40bp for owner occupiers and 45bp for investors. 
  • Yard rates are up 64 to 104bp based on borrower type, now starting at 3.34% (3.38% comp rate*).

Fixed rate home loans

  • Suncorp passed large increases. Rates are higher by between 145 and 167bp for 1 year, 121 to 141bp for 2 years, 105 to 127bp for 3 years, and 91 to 112bp for 5 years. 
  • Westpac increased most 1 year rates between 50 and 60bp, 2 year rates by 40 to 60bp, 3 year rates by 30 to 60bp, 4 year rates by 40 or 50bp, and 5 year rates by 50 or 60bp. 
  • NAB increased all fixed options. For owner occupiers making P&I repayments rates are up 170bp for 1 year, 115 to 130bp for 2 years and 135bp for 3 years. 4 and 5 years are up by 120bp.

Lowest home loan rates

Even though the interest rate averages for home loans have gone up, there are still a few variable rates below a ‘3’ in the Mozo database and fixed rates that start with a ‘3’. Below are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database (August 1, 2022)^^

LenderLoanVariable rate
Homeloans 360Owner Variable Home Loan (Plus, LVR 60-80%)2.54% p.a ( 2.54% p.a. comparison rate*)
Police Credit UnionThe Better Home Loan Special Offer (Owner Occupier, Principal & Interest, LVR<80%)2.64% p.a ( 2.69% p.a. comparison rate*)
Australian Mutual BankBasic Variable Rate Home Loan (Owner Occupier)2.69% p.a ( 2.75% p.a. comparison rate*)
Australian Mutual BankFirst Home Buyers Basic Variable Rate (Up to 40 Year Term)2.69% p.a ( 2.70% p.a. comparison rate*)
Australian Mutual BankFirst Home Buyers Loan2.79% p.a ( 2.67% p.a. comparison rate*)

Lowest and average fixed rates — Mozo database (August 1, 2022)^^

TermRate leaderFixed rate
1-yearSouthern Cross Credit Union3.89% p.a. (3.43% p.a. comparison rate*)
2-yearQueensland Country Bank3.99% p.a. (4.87% p.a. comparison rate*)
3-yearQueensland Country Bank3.99% p.a. (4.80% p.a. comparison rate*)
4-yearSouthern Cross Credit Union5.29% p.a. (4.06% p.a. comparison rate*)
5-yearAMP Bank5.44% p.a. (4.65% p.a. comparison rate*)

These are the lowest rates available in our database for borrowers with an <80% LVR. More competitive rates are available for borrowers with LVRs below 70% and 60%.

Are you thinking about a property or looking to refinance your existing mortgage? Use Mozo’s handy home loan comparison table to examine lenders side-by-side, or use our refinance calculator to see how much you could save.

^^Interest rates are based on an owner occupier making principal and interest repayments on a $400,000 loan with an 80% LVR. Check out our dedicated Australian home loan statistics page for more information on average mortgage rates.

Loan details

Rate change

Repayment change if rates go up

Home loan comparisons on Mozo - last updated 13 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Variable Home Loan 70

    interest rate
    comparison rate
    Initial monthly repayment
    3.10% p.a. variable
    3.12% p.a.

    Affordable home loan rate for buyers or refinancers.. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 30% deposit required.

    Details
  • Unloan Variable

    Owner Occupier, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    3.14% p.a. variable
    3.06% p.a.

    For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.

    Details
  • PAYG Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.29% p.a. variable
    3.33% p.a.

    Low variable rate. Ideal for new home buyers or refinancers. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

    Details
  • Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    3.79% p.a. variable
    3.79% 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.

    Details

* 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.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.