February home loan snapshot: House prices have a hot girl summer

Key Points

• The RBA won’t hike in February.
• Fixed interest rate home loans have begun to drop.
• Property prices are heating up again.

Reading the property market is like reading tea leaves. But perhaps the leaves are onto something this month. Things seem to have shifted.

Most property experts and economists agree the Reserve Bank of Australia (RBA) is done hiking interest rates for this cycle. Inflation has slowed down (or has increased less quickly), so the RBA is most likely gearing up for an extended interest rate hold. 

Cuts could also be on the forecast for later this year, but this is us reading tea leaves. The timing could shift depending on the economy. 

“No new rate hikes in 2024”, at least, is excellent news for home buyers and homeowners alike. No hikes mean no increases to home loan repayments, which means greater affordability – right? 

Let’s get into what borrowers and home buyers need to know in our February home loan snapshot.

Home values are once more on the upswing into February, reports CoreLogic, but the price increases aren’t felt equally across Australia’s capital cities.

Notably, Melbourne (-0.1%), Hobart (-0.7%), and Canberra (-0.2%) posted marginal declines in CoreLogic’s monthly home values index. It’s a summer slump – but barely. 

The national average, however, clocked in at +0.4% growth in January, up from the +0.3% increases in November and December. 

The research firm has consistently flagged 2024 as one to watch for home value growth, and despite the odds stacked against home buyers, high migration and the hellish rental market have kept housing demand tight. 

“Realistically, I don’t think the housing market will cool off,” says Mozo property expert Peter Marshall. 

“Home value growth will be slower in most capital cities thanks to high interest rates, but intense buyer competition still drives property prices. I just don’t see any meaningful way the housing market will slow down – for some years, now.”

The average mortgage is well over $600k in Australia now, and it’s worth remembering that the bulk of your mortgage repayments isn’t interest: it’s principal. (Unless you’ve gone interest-only, of course). 

So, while waiting for rate cuts to buy is all well and good, consider how rising house prices affect your finances. An extra 0.5% on your 6.00% interest rate can be an extra few hundred dollars per month in mortgage repayments. A 5% increase ($30,000) in your principal adds slightly more.

Figures calculated for a principal & interest home loan with a 25-year term.

You can crunch the numbers yourself using Mozo’s free mortgage repayments calculator.

The RBA didn’t meet in January, and most experts agree the RBA will continue to hold the cash rate at 4.35% in February. Yet despite no official pressure to raise variable rates, many lenders have passed along increases to customers anyway. 

Cashback offers for refinancers have also escaped the market – another 4 have disappeared. A moment of silence for these perks, please.

To be fair, however, a few home loan lenders have slashed variable rates, leaving some balance. After all, the average variable rate for owner-occupied properties hasn’t shifted in the Mozo database in two months: it’s still 6.85% p.a.

But if you’re looking for a sleek home loan interest rate, the market hasn’t turned in your favour just yet. Let’s run through some noteworthy rate changes for February.

• ANZ lifted rates for its Simplicity PLUS basic loan by 10 basis points. 
• Australian Mutual Bank added 20 bp to most of its variable rates. 
• ING increased its range of variable options by 5 bp. 
• Macquarie raised raised 10 bp in December, then slashed them between 9-21 basis points at the end of January, a week ahead of the RBA. 
• Unloan finally passed along the November rate hike: its loans are now up 25 bp. Up also added 25 bp to its rate (for owner-occupiers only). 

Bankwest lowered its basic option rates by 10 bp.

Fixed interest rates for home loans have started to decline in the Mozo database. Far more fixed cuts than hikes came through in January, which has inched the averages down for 1 to 5-year terms.

This could be good news for things to come. Fixed rates are inherently predictive since lenders set them based on what official interest rates will do during that time. Falling fixed rates now mean lenders expect rates to start coming down later – so a rate cut this year looks pretty good!

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: 6.53% p.a. 
• 2-year: 6.43% p.a. 
• 3-year: 6.41% p.a. 
• 4-year: 6.56% p.a. 
• 5-year: 6.61% p.a.

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

Lowest variable rates — Mozo database (1 February 2024)^^

Lowest and average fixed rates — Mozo database (1 February 2024)^^

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.