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. 

RELATED ARTICLE: Need a fix while working from home? Do it to your mortgage!

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!

Home loan comparisons on Mozo

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Last updated 24 June 2024 Important disclosures and comparison rate warning*
  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.59 % p.a.
    Fixed 3 years
    Comparison rate
    7.06 % p.a.
    Initial monthly repayment
    $3,190

    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.

image of houses

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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. 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

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.