Have rate reductions made it time to ‘fix and forget’ your home loan?

A month on from the Reserve Bank of Australia’s (RBA) March Emergency rate cut and the dust has well and truly settled, revealing a substantial shift in the fixed rate home loans market. 

According to a new Mozo analysis, the average fixed rates on offer for owner-occupiers across one to five year terms are now considerably lower than the average variable rate home loan in the Mozo database, which currently sits at 3.45%. 

Here’s the current lie of the land:

  • 1-year fixed term average: 2.82%
  • 2-year fixed term average: 2.73%
  • 3-year fixed term average: 2.80%
  • 4-year fixed term average: 3.12%
  • 5-year fixed term average: 3.16%

While there was little movement among lenders on the fixed rate front following the first March 3 RBA cut, a considerable number of lenders quickly moved to reduce fixed rates following the emergency RBA cut on March 19. 

“After the second rate cut in March, 66% of one-year fixed home loan rates changed, compared to 20% after the first rate cut. This market movement was similar across two, three, four and five year fixed home loans and reduced the fixed home loan average,” said Mozo Director, Kirsty Lamont. 

“With so many fixed home loans offering low interest rates, we might see a shift in Australia from a majority variable rate market to a predominantly fixed rate market. Many countries around the world have a majority fixed rate market, like the United States where it’s common to have a 30 year fixed rate.”

As a result of the heavy rate reductions in the last month, some fixed rate offers in the Mozo database are now edging close to the 2.00% mark. 

Among the lowest, online lenders Reduce Home Loans (2.64% comparison rate*) and Well Home Loans (2.41% comparison rate*) both have three-year fixed offers of just 2.09%, while ING’s three year Fixed Rate Loan offer is just 2.14% (3.62% comparison rate*). 

Australia’s Big Four banks have also joined the fixed rate cut party, with offers as low as 2.34% (4.18% comparison*) with the ANZ 2-year Fixed Rate offer and 2.39% (4.10% comparison rate*) for the NAB 3-year Tailored Home Loan (Fixed) offer. 

“Right now there are great deals available for borrowers who are happy to lock in a rate. The full economic impact of COVID-19 is still unknown causing uncertainty and fear, fixed interest rates are a great way to lock in a payment plan for your home loan,” said Lamont. 

“When looking for a fixed rate home loan it’s important to consider the automatic revert rate, so you aren’t forced to refinance at the end of your term. The average revert rate for fixed home loans is 3.62% but some lenders have lower revert rates.”

RELATED: Compare & switch in self-isolation with these 3 refinance home loans

Like the sound of fixing your rate? Get comparing by checking out some of the hottest offers around in the table below, or make your way over to Mozo’s fixed rate home loans comparison hub to view even more deals.

Compare fixed home loans - last updated 19 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    4.49% p.a.
    fixed 1 year
    3.81% p.a.

    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.

    Details
  • Fixed Rate Home Loan

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

    interest rate
    comparison rate
    Initial monthly repayment
    5.57% p.a.
    fixed 1 year
    4.03% p.a.

    Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Min 20% deposit. Receive $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 31 August 2022 and settle by 31 October 2022.

    Details
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    4.55% p.a.
    fixed 1 year
    3.91% p.a.

    Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.

    Details
  • Mozo Expert Choice Badge
    Fixed Rate Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    4.99% p.a.
    fixed 1 year
    4.08% p.a.

    Competitive fixed rates across 1 to 5 year terms. No application fee or annual fee. Free extra repayments (up to $10,000 per year). Winner of Australia's Best Large Mutual Bank 2022.

    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.

^See information about the Mozo Experts Choice Home Loan Awards

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