Fixed home loans falling as another 12 lenders drop rates below 5%
Another 12 providers joined the ranks of lenders offering borrowers fixed interest rates below 5% for one- and two-year terms in August, bringing the total to 29 according to Mozo analysis.
It marks the first time since October 2022 that we’ve seen this many lenders with offers below 5%, kickstarting a rates competition between the banks and an opportunity for borrowers looking to get a top home loan deal.
By comparison, there are no variable rates in the Mozo database that are below 5% (as of 11 September, 2025).
How much further will fixed rates fall?
While the Reserve Bank of Australia (RBA) is in the midst of a rate-cutting cycle, Mozo’s banking expert, Peter Marshall, says it’s unlikely we’ll see more significant cuts to fixed rates.
“Some analysts believe that there might only be one or two more cuts from the RBA in the current cycle,” says Marshall.
“Cuts to fixed rates during August were fewer and smaller than we’ve seen for the previous few months. If the outlook for the economy stays the same we may not see fixed rates fall much further than they are now,” he said.
Fixed rates below 5%
There’s now almost 30 providers in the Mozo database that are offering a fixed rate under 5% for one- and two-year terms, so we’ve got a sampling of them below.
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Bank of Queensland Discount Fixed Rate
- 4.89% p.a. for 2 years (5.42% p.a. comparison rate*)
- $2,000 cashback for new loans refinanced from another lender (T&Cs apply)
- Up to $10,000 extra repayments annually
- $10 monthly fee
BOQ’s Discount Fixed Rate Home Loan has a sharp two-year rate of 4.89% p.a. (5.42% p.a. comparison rate*) that ranks among the lowest in our database for borrowers with at least 20% deposit or equity – that’s an 80% loan-to-value ratio (LVR).
You still get a bit of flexibility with payments, as you can make up to $10,000 in extra repayments each year and choose a repayment schedule that works for you. There’s no application fee, but there is a $150 settlement fee and an ongoing $10 monthly service fee to keep in mind.
First Option Bank 1-year Fixed Simple Home Loan Special
- 4.99% p.a. for 1 year (5.22% p.a. comparison rate*) for 60% LVR
- First $1,000 worth of legal and valuation costs covered for owner-occupied loans (T&Cs apply)
- No application or monthly fees
- Refinance only
- Minimum deposit of 40% required for lowest rate
This one-year fixed rate from First Option Bank is only available for refinancers, and you’ll need to have a minimum equity of 40% – that’s a 60% LVR – in order to secure this rate of 4.99% p.a. (5.22% p.a. comparison rate*).
If you meet this criteria, you can get up to $1,000 worth of legal and valuation costs covered by First Option Bank when you refinance, though it’s only available for owner occupiers.
P&N Bank Fixed Rate Home Loan
- 4.75% p.a. for 2 years (5.42% p.a. comparison rate*)
- Free extra repayments up to $25,000 during the fixed period
- Split loan available
- $300 upfront fees
P&N Bank offers a two-year rate of 4.75% p.a. (5.42% p.a. comparison rate*), available to those with a loan-to-value ratio of less than 80%.
Despite being a fixed rate, you can still get ahead of your home loan by making extra repayments of up to $25,000 during the two-year term – and you won’t pay a penalty. Plus, P&N allows you to split your loan, so you can get the benefits of both rate types.
Keep in mind that there’s a $300 upfront fee, and once the fixed period ends, you’ll automatically rollover onto P&N’s revert rate. Revert rates may not be competitive, so it may be in your best interest to refinance.
IMB Bank Fixed Home Loan
- 4.99% p.a. for 2 years (5.47% p.a. comparison rate*)
- Get up to $4,000 cashback (T&Cs apply)
- Repay up to 12 months in advance without a fee
- $799 in upfront fees
IMB Bank’s big drawcard is its offer of up to $4,000 cashback for new purchases and refinanced home loans, though this amount is only available if your loan is $750,000 or more (T&Cs apply).
In addition to its cashback deal, IMB has a two-year fixed rate sitting at 4.99% p.a. (5.47% p.a. comparison rate*). If you want to get a little ahead of your mortgage, you can make repayments up to 12 months in advance without paying a penalty.
Keep an eye on IMB’s upfront fees, as they’re a little steeper compared to other lenders we’ve highlighted here. The cashback offer may make up for it though, so weigh up your options carefully.
SWS Bank Optimum Fixed Rate Home Loan
- 4.69% p.a. for one year (5.73% p.a. comparison rate*)
- Extra repayments up to $20,000 each year
- No upfront or monthly fees
- High revert rate after 1 year
SWS is one of the banks in our database that’s offering a fixed rate starting with a ‘4’ available for a one-year term. While that won’t be for everyone, it can give you repayment certainty in the short-term, and still open you up to potential rate cuts 12 months down the line.
Note that once the fixed period ends, it may be in your best interest to refinance as the rollover revert rate may not be competitive.
Should you fix your rate?
There’s no easy answer when it comes to choosing between a fixed or variable rate home loan, but here’s some factors for borrowers to consider when making a decision.
- Are there rates available that are lower than your current rate?
- Would the fixed rate still be competitive if variable rates fall again?
- Would you prefer to know what your repayments will be so you can budget, or would you rather have the flexibility of a variable rate?
- Are you making use of an offset account? Most fixed rate home loans in our database don’t include an offset account.
- Can you split the home loan? Would it make sense to fix a portion of the loan and keep the other half variable so that you can benefit from any rate drops.
You should also consider the benefits and drawbacks of fixing your interest rate at a time when further cuts may be coming.
For example, compare a two-year fixed rate of 5.00% p.a. with a variable rate of 5.25% p.a. – just one rate cut of 25 basis points could also bring your variable down to 5.00% p.a.
If interest rates were to come down further, the fixed rate of 5.00% p.a. will no longer be the cheaper option, and you could end up paying more than you need to.
However, if the variable rate option stays at 5.25% p.a. and no cash rate cuts come through, you could end up saving $1,752 over two years†.
† This calculation is based on a $500,000 loan over 25 years, making principal and interest repayments. Comparing an example variable rate of 5.00% p.a. with 5.25% p.a.
* 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.
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