Is now the right time to fix your home loan?
18 Jan 2019
To fix or not to fix that is the question - or at least it’s the question on the mind of both current and prospective Aussie homeowners.
If you’ve been keeping up with all the latest in home loan news, then you probably know that three of the big four banks hiked variable rates across the board last year, pushing many homeowners into the arms of smaller players and challenger lenders.
“Online lenders have been giving the big banks a run for their money for a while now and with the majority of the big four increasing their rates, it’s put a bad taste in the mouths of customers,” said Mozo Product Data Manager, Peter Marshall.
RELATED: RBA rate cut on the cards for 2019 as BOQ, Virgin Money hike home loan rates
And while the home loan market continues to remain rocky, Aussies looking to purchase their first home this year may be wondering whether or not to fix their mortgage to protect themselves from potential future hikes.
However, while fixing your home loan might sound like the right way to go, according to Marshall, unless you’re in it for the long haul, it might not make that much of a difference.
“If you’re after certainty or the assurance that your rate won’t change, then a fixed rate could be a good option - but you might have to pay a premium for it,” he said.
“Lenders have started to price in a potential cut to the cash rate this year, particularly for their longer term rates, so if you're after certainty in your repayments over the longer term there are some sharp deals around.”
And with Bank of Queensland and Virgin Money kicking off the year with steep rate hikes, Marshall is predicting that the RBA may act soon and cut rates.
RELATED: Is 2019 the year to ditch the big banks in search of a better home loan?
“I wouldn’t be surprised if the RBA cut rates in the first half of the year. This would mean the banks could hold on to some of the cash rate cuts to make up for increased funding costs, which should mean less pain for borrowers,” he said.
“But I can’t see lenders rushing to slash variable rates any time soon, and if they do pass on the cut, it won’t be by much. So if the RBA wants to provide relief for borrowers as well, a second cut could be on the cards.”
Smaller lenders shaking up the market
At the moment, the average variable rate for a basic loan without an offset account for the big four banks is 3.89%. That compares to the lowest comparable variable rate in the Mozo database - Reduce Home Loans’ Rate Lovers product - of 3.44%, making challenger lenders a hot pick for Aussie buyers.
RELATED: 5 New Year's resolutions for first home buyer success in 2019
To put that into perspective, say you took out a $300,000 to be repaid over 30 years on the average big bank rate of 3.89%. According to the Mozo repayment calculator, your monthly repayments would clock in at $1,413. But if you were to take out the same loan on the Reduce rate of 3.44%, your repayments would drop to $1,337 - a yearly saving of $912.
If you’re now thinking a variable rate could be right for you, check out our list down below or head over to our home loan comparison tool.
6 home loans for 2019 - rates updated daily
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Promoted
loans.com.au2.88% p.a. variable
2.90% p.a.
$1234
Product details Close detailsloans.com.auSmart Home Loan
Owner Occupier, Principal & Interest
2.88% p.a. variable
2.90% p.a.
A low-rate home loan that could save you thousands. No application or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.
Smart Home Loan
A low-rate home loan that could save you thousands. No application or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.
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2.88% p.a. variable
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2.90% p.a.
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$520
-
$0.00
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$0.00
-
yes - free
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yes - free
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no
-
80.00%
-
$50,000
-
$1,000,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Smart Home Loan
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Promoted
UBank
2.84% p.a. variable
2.84% p.a.
$1234
Product details Close detailsUBank UHomeLoan - Discount Offer
Owner Occupier, Principal & Interest
2.84% p.a. variable
2.84% p.a.
Free redraw with flexible repayments. Min 20% deposit. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category^.
UHomeLoan - Discount Offer
Free redraw with flexible repayments. Min 20% deposit. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category^.
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2.84% p.a. variable
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2.84% p.a.
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$0
-
$0.00
-
$0.00
-
yes - free
-
yes - free
-
no
-
80.00%
-
$200,000
-
-
-
Variable
-
Principal & Interest
-
Owner Occupier
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Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the UHomeLoan - Discount Offer
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Promoted
ANZ3.24% p.a. variable
3.28% p.a.
$1234
Product details Close detailsANZSimplicity PLUS Special Offer LVR <80%
Owner Occupier, Principal & Interest
3.24% p.a. variable
3.28% p.a.
Low rate. No ongoing fees. Can make extra repayments & redraw. Min. 20% deposit. Apply by 31/01/20 and settle by 30/04/20 for $2,500 cashback on eligible refinanced loans of $250K+ (incl. any new lending). Offer terms, fees, charges and elig. criteria apply.
Simplicity PLUS Special Offer LVR <80%
Low rate. No ongoing fees. Can make extra repayments & redraw. Min. 20% deposit. Apply by 31/01/20 and settle by 30/04/20 for $2,500 cashback on eligible refinanced loans of $250K+ (incl. any new lending). Offer terms, fees, charges and elig. criteria apply.
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3.24% p.a. variable
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3.28% p.a.
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$0
-
$0.00
-
$160.00
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yes - free
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yes
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no
-
80.00%
-
$50,000
-
-
-
Variable
-
Principal & Interest
-
Owner Occupier
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Weekly, Fortnightly, Monthly
-
Refinance by 31 January 2020 to receive up to $3,500 cash back depending on the loan amount with an ANZ linked transaction account.
Read our Mozo Review to learn more about the Simplicity PLUS Special Offer LVR <80%
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Promoted
Suncorp2.89% p.a.
fixed 3 years3.70% p.a.
$1234
Product details Close detailsSuncorpFixed Home Loan Special Offer Home Package Plus
Owner Occupier, Principal & Interest
2.89% p.a.
fixed 3 years3.70% p.a.
Receive a $2,000 cash bonus when you take out a Home Package Plus home loan of $250,000 or more (T&Cs apply). No monthly account keeping fee & No loan establishment fee.
Fixed Home Loan Special Offer Home Package Plus
Receive a $2,000 cash bonus when you take out a Home Package Plus home loan of $250,000 or more (T&Cs apply). No monthly account keeping fee & No loan establishment fee.
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2.89% p.a.
fixed 3 years -
3.70% p.a.
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$0
-
$375.00 yearly
-
$350.00
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yes - free up to $500 per month
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no
-
no
-
90.00%
-
$150,000
-
-
-
Fixed
-
Principal & Interest
-
Owner Occupier
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Weekly, Fortnightly, Monthly
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Receive $2,000 when you refinance an existing loan of $250,000 or more with an LVR of <90%. Apply by 13 December 2019 and settle by 5 March 2020.
Read our Mozo Review to learn more about the Fixed Home Loan Special Offer
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Promoted
Newcastle Permanent 3.19% p.a. variable
3.23% p.a.
$1234
Product details Close detailsNewcastle Permanent Special Real Deal Home Loan
Owner Occupier, Principal & Interest
3.19% p.a. variable
3.23% p.a.
Free extra repayments. No application or service fees. Only 10% deposit needed. Winner of a Mozo Experts Choice Award 2019 for the First Home Buyer Loan and Investor Home Loan categories.^
Special Real Deal Home Loan
Free extra repayments. No application or service fees. Only 10% deposit needed. Winner of a Mozo Experts Choice Award 2019 for the First Home Buyer Loan and Investor Home Loan categories.^
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3.19% p.a. variable
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3.23% p.a.
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$0
-
$0.00
-
$0.00
-
yes - free
-
yes - fees apply
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yes - partial only
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90.00%
-
$150,000
-
-
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Special Real Deal Home Loan
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Promoted
Reduce Home Loans 2.77% p.a. variable
2.78% p.a.
$1234
Product details Close detailsReduce Home Loans Rate Buster High Lend Variable Home Loan
Owner Occupier, Principal & Interest
2.77% p.a. variable
2.78% p.a.
Low variable rate. Extra repayments may be made at any time without penalty. 100% offset account available at $10/month. Loan Splits available.
Rate Buster High Lend Variable Home Loan
Low variable rate. Extra repayments may be made at any time without penalty. 100% offset account available at $10/month. Loan Splits available.
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2.77% p.a. variable
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2.78% p.a.
-
$0
-
$0.00
-
$0.00
-
yes - free
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yes
-
yes - optional $10/month
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80.00%
-
$200,000
-
$3,500,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Rate Buster High Lend Variable Home Loan
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