Fixed home loan rates have doubled in the last year

Houses by the water.

The Reserve Bank of Australia has been quite busy in recent months, delivering three consecutive interest rate hikes totalling 125 basis points. But anyone eyeing fixed rates in the hopes of safeguarding their finances may find they’ve already missed the boat.

Lenders began lifting fixed rates long before the central bank began tightening monetary policy in May — partly to get ahead of a changing interest rate environment and partly due to increasing funding costs.

The result? Fixed rates now look vastly different than they did last year, when they nearly overtook variable rates as the more popular of the two. In fact, the average fixed rate among lenders we track has doubled across almost all terms.

Average fixed rate (OO, P&I) changes over 12 months

TermJuly 2021 averageJuly 2022 average
1-year2.32% p.a.4.43% p.a.
2-year2.26% p.a.5.07% p.a.
3-year2.32% p.a.5.46% p.a.
4-year2.52% p.a.5.76% p.a.
5-year2.75% p.a.5.91% p.a.

The big banks in particular haven’t been holding back. This month, CommBank hiked rates on all terms by a staggering 140 basis points, while NAB raised rates by between 80 and 110 basis points.

The lowest 5-year rate now available from a big four bank is Westpac’s 5.69% p.a. (5.62% p.a. comparison rate*). The rest have pushed rates above 6% p.a.

“Fixed rates are basically out of the market now. The big banks are certainly not trying to attract customers with their fixed rates, so they’re looking at making variable loans look great by comparison,” said Mozo’s banking expert Peter Marshall.

“If you’re really intent on fixing your loan, you’ll have to look beyond the big banks and towards the smaller players. Regional credit unions surprisingly still have some pretty good deals.”

Borrowers who were comforted by the RBA’s early assurances that the cash rate wouldn’t rise until 2024 may be feeling nervous. But Marshall says there are steps they can take to ease some of the pressure.

“If you’ve got an offset account, put in every little bit of money that you’ve got. It’s absolutely the best way to save on interest,” he said.

“If you don’t have that kind of option available to you, think about refinancing. It can be a painful process, but if you can switch to a cheaper loan, it’s better to do so than continue to struggle under the weight of those higher repayments.”

For more information on lending trends, head over to our home loan statistics page. And if you’re in the market for a home loan, visit our home loan comparison page, or browse the selection below.

Home loan comparisons on Mozo - last updated 13 August 2022

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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, 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.

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