December home loan snapshot: Interest rates and the summer property market cool down

Key Points

  • The RBA held interest rates at 4.35% in December – the next meeting is February 2024. 
  • Lenders are still passing along the November RBA rate hike.
  • CoreLogic reports the housing market slowed in November. Summer could be a window for keen home buyers.
Well dressed man preparing for the summer home loan market with the Mozo home loan snapshot.

Happy Holidays, homeowners. This season’s tidings include a cash rate hold for December 2023 and a cooler-than-expected start to the summer housing market. 

Home loans have come a long way in 2023, with six RBA rate hikes, a colossal rise in rental prices, and capital gains behind us. But let’s look to the future, and summer 2024. What do home buyers and homeowners need to know? 

Let’s get into the monthly home loan snapshot for December. 

Summer property market so far cooler than expected

CoreLogic reports that November posted its smallest home value gains in a long time – just 0.6%. Auction activity across the country’s capital cities has also cooled down. Some housing markets, like Melbourne, Hobart, and Darwin, have even posted declines in value. 

For property buyers who missed out on the spring, summer could prove the next best option to jump on a dream home. This especially goes for home buyers wary of more potential rate hikes in 2024: there will be a pause in official interest rate activity until the RBA meets in February. 

December home loan interest rates to stay steady with new rate hold

Man grinning about the RBA December interest rate hold.

The Reserve Bank of Australia left the cash rate unchanged at 4.35% for December. The central bank doesn’t meet in January, which means the next interest rate announcement to watch is February 2024. 

At the moment, the February meeting remains ‘live’, meaning there’s a chance it could go either way. It will all depend on economic conditions over the coming months. If holiday spending drives inflation too high, homeowners can brace themselves for another 25 basis points to official interest rates.  

The November rate hike is still trickling through, as well. Most home loan lenders have increased their rates in Mozo’s database – some have even exceeded the 0.25% November hike. The stragglers may change their rates in the next few months as they catch up to the market. 

At the time of writing, the average variable interest rate for owner-occupied properties is 6.84% p.a. in the Mozo database. During the four-month rate hold, it hovered around 6.61% p.a.

Fixed rates heat up across the board this summer

The fixed-rate mortgage cliff has largely passed without too much fuss. This phenomenon described the larger-than-usual number of homeowners on low-rate pandemic-era fixed home loans, whose terms would gradually expire throughout 2023 and 2024. 

So far, households seem to have absorbed the price shock without going into arrears – though mortgage stress is still mounting. 

Fixed interest rates have begun to climb across the board again as lenders prepare for more possible rate hikes. For customers hoping to opt out of the rate hike cycle for a little while, there are still some worthwhile options to consider – usually on shorter terms, and usually for smaller lenders. 

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: 6.54% p.a. 
  • 2-year: 6.47% p.a. 
  • 3-year: 6.44% p.a. 
  • 4-year: 6.62% p.a. 
  • 5-year: 6.65% p.a.

Recent home loan rate movements

Some home loan lenders have opted for larger increases than the 0.25% added to the cash rate in November, though most have just opted for the standard hike. 

Here are some of the highlights from November.

  • ING increased variable rates by 30 basis points.
  • Qudos Bank lifted variable rates by 35 bp.
  • Bank First pushed rates up 35 bp. 
  • Westpac boosted its Flexi First Options introductory and ongoing rates by 35 bp. 
  • RACQ raised rates by 35 bp for its Fair Dinkum Home Loan. 
  • ANZ increased most fixed rates by 25 to 35 bp. 

Special offers like HSBC’s cashback offer have also been wound back, though some new offers have come on the market. 

For instance, Greater Bank launched an offer for first-home buyers with an 80% loan-to-value ratio (LVR) that includes $3,000 and a rebate of 50% of the cost of lender’s mortgage insurance (LMI). 

The Mutual Bank is also now spruiking $2,500 cashback for home loans over $500k.

Current lowest home loan rates

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

Lowest variable rates — Mozo database (5 December 2023)^^

Lender
Loan
Variable rate
The Mutual Bank
Special Budget Home Loan
5.69% p.a. (5.70% p.a. comparison rate*)
Unloan
Unloan Variable Owner-Occupier, Refinance Only
5.74% p.a. (5.65% p.a. comparison rate*)
Illawarra Credit Union
Bare Essentials Special Offer
5.79% p.a. (5.89% p.a. comparison rate*)
Auswide Bank
Basic Home Loan
5.89% p.a. (5.94% p.a. comparison rate*)

Lowest and average fixed rates — Mozo database (5 December 2023)^^

Term
Rate leader
Fixed rate
1-year
Homeloans360
5.89% p.a. (5.62% p.a. comparison rate*)
2-year
Australian Mutual Bank
5.53% p.a. (6.30% p.a. comparison rate*)
3-year
Australian Mutual Bank
5.48% p.a. (6.24% p.a. comparison rate*)
4-year
BCU Bank
5.99% p.a. (6.19% p.a. comparison rate*)
5-year
Australian Mutual Bank
5.63% p.a. (6.16% p.a. comparison rate*)

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 low interest rate home loans with Mozo - last updated 21 February 2024

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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. You can change the loan amount and term in the input boxes at the top of this table. 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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