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. Advertiser disclosure.
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1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
$1234
Product details Close detailsSmart Booster Home Loan
1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR
1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required.
Smart Booster Home Loan
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required.
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1.99% p.a.variable for 12 months and then 2.48% p.a. variable
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2.47% p.a.
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$520
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$0.00
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$0.00
-
yes - free
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yes - free
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Optional - with 0.10% additional interest
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$520
-
80.00%
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$50,000
-
$1,000,000
-
Variable
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Principal & Interest
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Owner Occupier
-
Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Smart Booster Home Loan
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2.34% p.a. variable
2.34% p.a.
$1234
Product details Close detailsUHomeLoan - Discount Offer
Owner Occupier, Principal & Interest
2.34% p.a. variable
2.34% p.a.
Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.
UHomeLoan - Discount Offer
Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.
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2.34% p.a. variable
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2.34% p.a.
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$0
-
$0.00
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$0.00
-
yes - free
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yes - free
-
no
-
$0
-
80.00%
-
$100,000
-
-
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
-
Read our Mozo Review to learn more about the UHomeLoan - Discount Offer
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-
2.19% p.a. variable
2.19% p.a.
$1234
Product details Close detailsCelebrate Variable Home Loan
<60% LVR, Owner Occupier, Principal & Interest
2.19% p.a. variable
2.19% p.a.
Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
Celebrate Variable Home Loan
Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
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2.19% p.a. variable
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2.19% p.a.
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$0
-
$0.00
-
$0.00
-
yes - free
-
yes - free
-
no
-
$0
-
60.00%
-
$100,000
-
$2,000,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
-
Read our Mozo Review to learn more about the Celebrate Variable Home Loan
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2.04% p.a.
fixed 2 years2.79% p.a.
$1234
Product details Close detailsSpecial Offer Reward Me Fixed Rate Home Loan
Owner Occupier, LVR <80%, 300k+
2.04% p.a.
fixed 2 years2.79% 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.
Special Offer Reward Me Fixed Rate Home Loan
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.
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2.04% p.a.
fixed 2 years -
2.79% p.a.
-
$450
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$10.00 monthly
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$350.00
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yes - up to $10,000 per annum
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no
-
no
-
$450
-
80.00%
-
$300,000
-
-
-
Fixed
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
-
$3,000 cashback for new borrowings of at least $300,000 with applications made by 22 Jan 2021 and settled by 23 April 2021.
Read our Mozo Review to learn more about the Special Offer Reward Me Fixed Rate Home Loan
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2.09% p.a.
fixed 2 years2.56% p.a.
$1234
Product details Close detailsBasic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR 70-80%
2.09% p.a.
fixed 2 years2.56% p.a.
Flexible loan structure – create up to six loan accounts with different rate and repayment types. Free redraw from your loan using Macquarie Online.
Basic Home Loan
Flexible loan structure – create up to six loan accounts with different rate and repayment types. Free redraw from your loan using Macquarie Online.
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2.09% p.a.
fixed 2 years -
2.56% p.a.
-
$0
-
$0.00
-
$400.00
-
yes - free
-
yes - free
-
no
-
$0
-
80.00%
-
$150,000
-
$750,000
-
Fixed
-
Principal & Interest
-
Owner Occupier
-
Monthly
-
Read our Mozo Review to learn more about the Basic Home Loan
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-
2.19% p.a. variable
2.20% p.a.
$1234
Product details Close detailsNeat Home Loan
Owner Occupier, Principal & Interest, LVR <60%
2.19% p.a. variable
2.20% p.a.
Competitive variable rate. Borrowers choose their repayment schedule (weekly, fortnightly or monthly) and can also make extra repayments. Redraw facility available. Simple online application process.
Neat Home Loan
Competitive variable rate. Borrowers choose their repayment schedule (weekly, fortnightly or monthly) and can also make extra repayments. Redraw facility available. Simple online application process.
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2.19% p.a. variable
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2.20% p.a.
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$250
-
$0.00
-
$300.00
-
yes - free
-
yes - free
-
no
-
$250
-
60.00%
-
$80,000
-
$5,000,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Neat Home Loan
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^See information about the Mozo Experts Choice Home loans Awards
