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.

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. 

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. 

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.

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.

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.

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)^^

Lowest and average fixed rates — Mozo database (5 December 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.