Fixed rate cut frenzy! Why most lenders aren’t slashing variable rates

This month, the Reserve Bank of Australia (RBA) made the extraordinary decision to cut it’s official cash rate twice - in response to the outbreak and spread of COVID-19. 

However, Aussie home loan lenders have responded to the latest “emergency rate cut” a bit differently than they usually would. 

According to the Mozo database, the majority of lenders who have cut rates since the most recent RBA decision have dropped their fixed rate offerings, while only a handful have slashed variable rates. 

Currently, the lowest 3 year fixed rate in our database sits at 2.09% (2.41% comparison rate*), pushing rates closer to dropping below the 2.00% line. 

Mozo’s Banking Expert, Peter Marshall, says this is to be expected in a very low interest rate environment as banks attempt to maintain their net margins while still offering their deposit customers interest. 

“The government has also made a pool of funds available to banks, fixed at a rate of 0.25% for up to three years - these factors have resulted in many lenders choosing to cut fixed rates,” he said. 

“While we have not yet seen any fixed rates slip below the 2.00% mark, I expect that it will happen. And if it does it would be a great time to consider fixing all or part of a mortgage as it’s unlikely rates will go lower than that.” 

Amongst the lenders that have responded to the recent RBA rate change, ALL of the big four slashed their fixed mortgage rates.  

And currently ANZ are offering the lowest 2 year fixed rate of 2.19% (4.00% comparison rate*) for owner occupiers with an LVR of 80%, compared to 2.29% offered by CommBank (3.87% comparison rate*) , Westpac (3.45% comparison rate*) and NAB (3.91% comparison rate*).  

“Given that fixed rates are becoming cheaper than variable rates it’s easy to understand the appeal that we will see more borrowers opting to fix,” Marshall said. 

“It’s always important to keep in mind that there may be break costs if you need to leave the loan early, although if rates are increasing when you want to break those costs will be minimal.” 

Also remember that reversion rates on home loans are generally higher than the rates you locked in, and in some cases higher than standard variable rates. 

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Want to compare some killer fixed mortgage rates? Take a look at the table below or jump over to our home loan comparison tool for even more options!

Fixed Rate Home Loans 2020 - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
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    UHomeLoan (1 Yr Fixed)

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.79% p.a.
    fixed 1 year
    2.18% p.a.

    Fast, easy to apply and no ongoing fees. Choose between weekly, fortnightly or monthly repayments. 1 year fixed rates are for new Owner Occupier Principal & Interest loans.

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    Details
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    Fixed Rate Home Loan

    Home Loan Package, Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.67% p.a.

    Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Min 20% deposit. Refinancers borrowing $250,000 or more could receive $3,288 cashback (T&Cs, eligibility and lending criteria apply).

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    Details
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    Own Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    2.34% p.a.
    fixed 2 years
    2.59% p.a.

    Competitive fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

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    Details
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    Special Fixed Rate Home Loan (Premium Plus Package, LVR <80%)

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.24% p.a.
    fixed 2 years
    3.73% p.a.

    Lock in a low fixed rate or choose to split your loan between fixed and variable. Insurance discounts and no fee credit card or zero fee personal loan available. $2,000 cashback offer for investor & owner occupied home loans over $250k with LVR ≤80% when refinancing to Newcastle Permanent. Limited time offer extended, T&Cs apply.

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    Details
  • placeholder
    Well Balanced Fixed

    Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    2.05% p.a.
    fixed 2 years
    1.92% p.a.

    Super low fixed rate and only 20% deposit required. Optional 100% offset account. Free extra repayments and redraw facility. Flexible repayment schedule.

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    Details
  • placeholder
    Fixed Rate Home Loan

    Home Loan Package, Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.67% p.a.

    Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Min 20% deposit. Refinancers borrowing $250,000 or more could receive $3,288 cashback (T&Cs, eligibility and lending criteria apply).

    Go to site
    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.

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