August home loan snapshot: Lenders fire up interest rates ahead of RBA peak

It’s been an unusually warm winter indeed. Despite the Reserve Bank of Australia holding official interest rates steady last month, many lenders cast fresh sparks on their home loans. The ensuing fire has blazed through fixed-rate and variable-rate offers alike and pushed up the averages in Mozo’s database. 

The variable average for owner-occupiers for August sits at 6.60%, while depending on the term, fixed rates now average between 11 to 20 basis points higher than at the start of July. 

Mortgages have long been a casualty of the RBA’s efforts to chase down runaway inflation, but if lenders move even when the RBA doesn’t, do borrowers still stand a chance?

Value has been harder to find these days. Long gone are the interest rates that begin with a ‘4’, and many cashback offers (or indeed, special offers in general) have been pulled from the market. Rome is burning, indeed. 

There is grace to be had, however. The RBA kept its hands off the cash rate lever for another month in August, leaving official interest rates at 4.10%. That’s two months in a row now, so the tightening cycle is drawing to a close. The economy will contract further into spring as delayed hike effects catch up to household budgets. Though the bank retains a tightening bias, rate hikes may be over for now. 

So with another hold in store, how do home loans look for August?

A quiet July never happened for fixed rate home loans. Despite the RBA pause, lenders ratched up their short and long-term fixed rates – many between 15 and 65 basis points. 

Fixed rates are inherently predictive. The latest wave of fixed hikes may indicate lenders expect official interest rates to go higher and stay higher for longer, which isn’t great news for borrowers hoping to duck the last of the cycle by fixing their home loan. 

There are still some relatively low fixed rates that could outcompete a variable one right now, but with inflation expected to come down next year, don’t expect many fixed deals to stay competitive for the duration of their term. 

At the time of writing, these are the average fixed rates for owner occupiers with an 80% LVR and a $400,000 loan:

• 1-year: 6.29% p.a. 
• 2-year: 6.26% p.a. 
• 3-year: 6.23% p.a. 
• 4-year: 6.47% p.a. 
• 5-year: 6.46% p.a.

Winter winds blew chilly for home loans in July, despite the tepid relief of the RBA rate pause. Here are some of the most dramatic home loan changes Mozo recorded in its database.

• ANZ hiked rates by 10 bp on its headline variable home loan, Simplicity PLUS, and by 15 - 55 bp on its fixed rate offers. 
• NAB pulled a similar move to ANZ by adding 10 bp to its lowest rate on the Base Variable Rate Home Loan Special Offer and 35 - 50 bp to fixed terms. 
• Commonwealth Bank’s Extra Home Loan rates crept up by 3 to 5 basis points, but some of its fixed offers rocketed by 40 to 65 bp. 
• ING broke free from the pack by cutting rates to 10 to 15 bp, depending on borrower type. Don’t get too comfy, though: the online bank also withdrew its cashback offers for refinancers.

Here are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database (1 August 2023)^^

Lowest and average fixed rates — Mozo database (1 August 2023)^^

The above are the lowest rates in our database for borrowers with an LVR < 80%. More competitive rates are available for borrowers with lower loan-to-value ratios.

If you’re considering buying property or refinancing your existing mortgage, use Mozo’s 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.

Compare home loans in the table below.