July home loan snapshot: Mortgages ice over for the winter

Sydney terrace house collage over winter background

Against all opinions, the Reserve Bank of Australia (RBA) did not hold interest rates steady in June. Instead, the bank maintained its hawkish bias by adding another 0.25% to the official cash rate to chase down runaway inflation

Eventually, there will be an end to this relentless rise of interest rates, of course, as the RBA can only tighten so much before it risks a full-blown recession. But until it’s ready to ease off, home loans will become more expensive with every decision. 

Now, the average variable interest rate for owner-occupiers making P&I repayments is 6.57% p.a. in the Mozo database. Few – if any – offers now start with a ‘4’, and special deals like refinancing cashback or discounted rates have begun vanishing from the market. It’s a cold winter, indeed. 

Let’s see how home loans stack up in July in our latest monthly snapshot.

Fixed rates jump ahead as lenders readjust their rate expectations

Collage of people shaking hands over a sold house

Fixed rates are inherently predictive. Lenders price them based on how high or low they expect their funding costs to be over periods of time. 

Previous months saw fixed rate home loans fall considerably on 3 to 5-year terms, suggesting lenders saw matters falling. However, after the June RBA upset, lenders hiked short terms considerably. In their view, interest rates may stay high for the time being. 

While fixing your interest rate through the remainder of the rate cycle may guarantee consistent repayments, it carries inflexibility buyers may not appreciate if variable rates unwind next year. However, there are still fixed offers that smash variable ones – it’s just about doing your research. 

At the time of writing, these are the average fixed rates for owner occupiers with an 80% LVR and a $400,000 loan:

  • 1-year: 6.08% p.a.
  • 2-year: 6.06% p.a.
  • 3-year: 6.06% p.a.
  • 4-year: 6.31% p.a.
  • 5-year: 6.35% p.a.

Recent home loan rate movements

Collage of people accepting keys and settling a mortgage

June truly was a huge shock to the market, leaving home loans a little complicated for July. Here are some of the starkest changes Mozo saw last month. 

  • Unloan, a digital home loan for refinancers built by Commonwealth Bank, lifted its competitive variable rates by 60 basis points in June. 
  • AMP hiked 1-year rates 100 bp, 2-year rates 75 bp, and 3-year rates 70 bp, but it wasn’t alone. Commonwealth Bank, Westpac, ING, and NAB all lifted fixed options by eye-watering amounts.
  • Bankwest, bcu Bank, Heritage Bank, and Westpac all stopped their cashback offers. 
  • ING and Heritage Bank hiked variable rates more than the RBA, at 35 bp.
  • Commonwealth Bank lifted its Extra Home Loan owner-occupier lead rate by 47 bp.
  • St. George brands cut cashback offers in half from $4,000 to $2,000.

Current lowest home loan rates

Collage of a woman comparing mortgage rates on her tablet

Here are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database (3 July 2023)^^

Variable rate
Community First Bank
Basic Variable Home Loan
5.39% p.a. (5.44% p.a. comparison rate*)
Bank Australia
Basic Home Loan Refinance Offer
5.49% p.a. (5.54% p.a. comparison rate*)
Pacific Mortgage Group
Standard Variable Home Loan
5.54% p.a. (5.54% p.a. comparison rate*)
Hume Bank
liteBlue Rate Variable Home Loan
5.59% p.a. (5.60% p.a. comparison rate*)

Lowest and average fixed rates — Mozo database (3 July 2023)^^

Rate leader
Fixed rate
The Capricornian
5.10% p.a. (6.62% p.a. comparison rate*)
Australian Mutual Bank
5.23% p.a. (6.08% p.a. comparison rate*)
The Capricornian
4.99% p.a. (6.29% p.a. comparison rate*)
5.50% p.a. (5.76% p.a. comparison rate*)
5.54% p.a. (6.20% p.a. comparison rate*)

The above are the lowest rates in our database for borrowers with an LVR < 80%. More competitive rates are available for borrowers with lower loan-to-value ratios.

If you’re considering buying property or refinancing your existing mortgage, use Mozo’s home loan comparison table to examine lenders side-by-side, or use our refinance calculator to see how much you could save.

^^Interest rates are based on an owner occupier making principal and interest repayments on a $400,000 loan with an 80% LVR. Check out our dedicated Australian home loan statistics page for more information on average mortgage rates.

Compare home loans - last updated 8 December 2023

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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

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