Experts urge Aussies to opt for fixed home loan rates, following emergency RBA cut

By Tara McCabe ·

Mozo money experts have urged Aussies to consider fixing their home loan rate, following the Reserve Bank of Australia’s emergency cash rate cut.

In response to the recent economic downturn as a result of the Coronavirus pandemic, the RBA made the decision today to cut the official cash rate by 25 basis points. At just 0.25%, the cash rate is now the lowest it has been in 23 years. 

RELATED: How home loan refinancing could give you a much-needed cash injection in 2020

Mozo Director Kirsty Lamont said, “With many of us tightening our purse strings, today’s emergency rate cut could be the signal to fix your home loan, as many lenders may soon be faced with higher funding costs they will need to pass on to customers.”

This comes just days after Mozo research revealed that 87% of Australians fear trying economic times ahead and that 1 in 5 are anxious about their job security. 

Why fix?

“Although record low rates are generally a good thing for mortgage customers, the level of risk faced by lenders in this volatile market means locking in a rate could be a smart move.” 

Lamont suggested that in these difficult times, fixing your home loan interest rate could help ease any anxiety you might have concerning future variable interest rate hikes. 

Within minutes of the RBA’s announcement to cut the cash rate, big four bank Commbank announced that it would be cutting rates for it’s 1, 2 and 3 year Fixed Rate (Wealth Package) Home Loan by a significant 70 basis points. This means that 2 year fixed rates will drop to a low 2.29% p.a. (comparison rate 4.19%*). This new low rate will not come into effect until May 1st, but when it does it will most likely be the lowest fixed rate home loan in the Mozo database^.

Depending on what other home loan lenders make cuts, this low rate will be closely followed by the following fixed rates offered by ING, BankVic and Well Home Loans:

ING Fixed Rate Loan (Owner Occupiers with Orange Advantage)

  • 2.49% p.a. for 3 year fixed rate loans (3.71% p.a. comparison rate*)
  • Must be combined with ING Orange Advantage Home Loan
  • No annual service fee (annual service fee $299 for Orange Advantage Home Loan)
  • No application fee

BankVic Fixed Rate Home Loan (Premium Package)

  • 2.50% p.a. for 3 year fixed rate loans (3.76% p.a. comparison rate*)
  • $375 annual service fee
  • No application fee

Well Home Loans Well Balanced Fixed Home Loan

  • 2.63% p.a. for 3 year fixed rate loans (3.54% p.a. comparison rate*)
  • No annual service fee
  • $250 application fee

Next steps

Despite Commbank’s decision today to make cuts to its fixed interest rate home loans, Mozo’s research found that on average, fixed rates offered by the big four are still 0.54% higher than the most competitive rate on the market for 3 year terms. 

So while fixing your rate may protect you from future rate rises, it is still a good idea to shop around for the most competitive rates.

RELATED: UBank crowned 2020 Mozo Experts Choice Home Lender Bank of the Year

Lamont also warned Aussies to watch out for hefty variable reversion rates once the fixed loan period is up. Mozo’s research found reversion rates as high as 5.60% p.a., that’s 3.16% p.a. above the most competitive variable rate in the Mozo database!

Feeling inspired to search for a fixed rate home loan? Why not take a look at the deals on offer below or compare rates on our compare fixed rate home loans page.

^Correct as of 19th March, 2020.

Compare fixed rate home loans - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Special Offer Fixed Rate Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a.
    fixed 3 years
    2.70% p.a.

    Limited time 3 Year Fixed Rate Special Offer for purchase or refinance. Rate lock option available. No monthly or ongoing fees.

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    Details
  • placeholder
    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.75% p.a.
    fixed 3 years
    2.22% 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.

    Go to site
    Details
  • 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
    2.43% p.a.

    Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.

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    Details
  • placeholder
    Special Offer Reward Me Fixed Rate Home Loan

    Owner Occupier, LVR <80%, 300k+

    interest rate
    comparison rate
    Initial monthly repayment
    1.94% p.a.
    fixed 2 years
    2.77% p.a.

    Enjoy $3,000 cashback when you refinance with Virgin Money (T&Cs apply). Additional repayments up to $10,000 per annum. Reverts to the discounted variable rate on expiry of the fixed term.

    Go to site
    Details
  • placeholder
    Star Classic Fixed Special Home Loan

    Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.74% p.a.
    fixed 2 years
    2.23% p.a.

    Enjoy a new and unbelievably low introductory rate home loan for one year. Unlimited free online redraws and additional repayments up to $20K to help you pay off your home sooner. Multiple loan splits possible and flexible replacements. (Rates revert after introductory period ends).

    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 Loans Awards

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