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 - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    Go to site
    Details
  • placeholder
    Basic Home Loan

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

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.32% 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.

    Go to site
    Details
  • placeholder
    Special Offer Reward Me Fixed Rate Home Loan

    Owner Occupier, LVR <80%, 300k+

    interest rate
    comparison rate
    Initial monthly repayment
    1.98% p.a.
    fixed 2 years
    2.66% p.a.

    Enjoy $3,000 cashback when you refinance with Virgin Money (T&Cs apply). Additional repayments up to $10,000 per annum. Reverts to the discounted variable rate on expiry of the fixed term.

    Go to site
    Details
  • Hot DealReceive $2,000 cashback when refinancing to 86 400 (T&Cs apply)
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    Own Home Loan

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

    interest rate
    comparison rate
    Initial monthly repayment
    1.84% p.a.
    fixed 1 year
    2.63% 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.

    Go to site
    Details
  • placeholder
    Special Fixed Rate Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.89% p.a.
    fixed 2 years
    3.67% 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 home loans over $250k with at least a 20% deposit when refinancing to Newcastle Permanent. Enjoy local branches and call centre.

    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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