Experts urge Aussies to opt for fixed home loan rates, following emergency RBA cut
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.
Fixed home loan comparisons on Mozo
-
Fixed Home Loan
- Owner Occupier
- Principal & Interest
- LVR <95%
Go to site- Interest rate
-
5.69
%
p.a.
Fixed 3 years
- Comparison rate
-
6.28
%
p.a.
- Initial monthly repayment
-
$2,899
Get the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.
- interest rate
-
1 year - 6.19% p.a. (6.45% p.a.*)
2 years - 5.69% p.a. (6.34% p.a.*)
3 years - 5.69% p.a. (6.28% p.a.*)
4 years - 5.89% p.a. (6.30% p.a.*)
5 years - 5.89% p.a. (6.27% p.a.*)
- Fixed loan revert rate
-
6.34% p.a.
- Upfront fees
-
$799
- Ongoing fees
-
$6.00 monthly
- Discharge Fee
-
$350.00
- Package
-
-
- Maximum loan to value ratio
-
95.00%
- minimum borrowing amount
-
$10,000
- maximum borrowing amount
-
$5,000,000
- type of mortgage
-
Fixed
- Repayment types
-
Principal & Interest
- Availability
-
Owner Occupier
- Repayment options
-
$2,899
- Extra repayments
-
yes - free up to 1 year in advance
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$500.00
- Offset account
-
no
- Split account
-
yes
- Other restrictions
-
Monthly fee only applies to fixed period of loan.
- Other benefits
-
-
- Special Offers
-
$4,000 cashback for loans $750,000 and above with a maximum LVR of 80%, settled within 90 days of application for refinancers or 180 for purchase loans. $3,000 for loans between $500k and $749k, $2,000 for loans between $250k and $499k.
Read reviews and learn more about IMB Bank home loans
Go to site -
Fixed Rate
- Owner Occupier
- Principal & Interest
- <80% LVR
- Interest rate
-
5.74
%
p.a.
Fixed 3 years
- Comparison rate
-
6.81
%
p.a.
- Initial monthly repayment
-
$2,915
Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.
- interest rate
-
1 year - 6.14% p.a. (7.13% p.a.*)
2 years - 5.74% p.a. (6.94% p.a.*)
3 years - 5.74% p.a. (6.81% p.a.*)
4 years - 5.89% p.a. (6.75% p.a.*)
5 years - 5.99% p.a. (6.69% p.a.*)
- Fixed loan revert rate
-
7.24% p.a.
- Upfront fees
-
$160
- Ongoing fees
-
$0.00
- Discharge Fee
-
$160.00
- Package
-
-
- Maximum loan to value ratio
-
80.00%
- minimum borrowing amount
-
$20,000
- maximum borrowing amount
-
-
- type of mortgage
-
Fixed
- Repayment types
-
Principal & Interest
- Availability
-
Owner Occupier
- Repayment options
-
$2,915
- Extra repayments
-
yes - free up to to lesser of 5% of original fixed loan amount, or $5,000 each year
- Redraw facility
-
no
- Minimum redraw amount
-
-
- Offset account
-
Optional - $10 per month - 1 year fixed term only
- Split account
-
yes
- Other restrictions
-
-
- Other benefits
-
No monthly fee after end of fixed rate term. Lock your fixed rate for 90 days for a fee of $750 per $1m in lending (or part thereof).
- Special Offers
-
$3,000 cashback for eligible First Home Buyers borrowing $250k+, $2,000 cashback when you refinance loans of $250k+, <80% LVR, settle within 180 days for first home buyers, 120 days for refinances. Excludes refinances from ANZ, ANZ Plus and Suncorp.
Read reviews and learn more about ANZ home loans
Interested in an ANZ home loan? Lendi specialists can help you refinance your home loan.
Compare 25+ lenders with our trusted partner, Lendi.
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Your selected home loans
* 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.
^See information about the Mozo Experts Choice Home Loan Awards
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