June home loan snapshot: Has the home loan rate war ended?

Last month, the Reserve Bank defied expectations with an additional 0.25% hike to the official cash rate. Lenders soon jumped at the opportunity to lift their interest offers on variable home loans – with some outrunning even the RBA with 35 - 50 basis point jumps.

Cashback offers for refinancers have dried up while even introductory rates saw significant rises. Seems lenders are no longer concerned about being competitive: now, it’s all about recouping their costs.

As a result, the average variable interest rate for owner-occupiers making P&I repayments sits at 6.31% p.a. in the Mozo database. Oh, Alexander wept.

Yet there is some good news buoying the sinking house prices: we may be nearing the next rate hold, with many experts predicting a steady cash rate in June and July. While the August RBA meeting remains ‘live’, this could smooth the way for buyers ready to jump into an already warm winter property market. 

So have the recent changes reshuffled lenders for June? Let’s break down the numbers.

Fixed rate home loans remain hard sells in a tight market, with some shorter terms climbing point by point in the Mozo database. However, some lenders even made significant cuts. Four and five year terms in particular inched backwards, suggesting banks expect rates to smooth over in the long run.  Given how high variable rates have soared, some of these offers may even look competitive. 

Indeed, locking in your interest rate to ride out the remainder of the rate cycle could be a good way of guaranteeing your repayments for a few years. But with inflation expected to slow by mid-2024, variable rates may unwind sooner than later. 

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: 5.75% p.a.
  
• 2-year: 5.83% p.a.
  
• 3-year: 5.87% p.a.
  
• 4-year: 6.21% p.a.
  
• 5-year: 6.27% p.a.

Sweeping changes hit the home loan market last month. Here are some of the most eye-watering trends. 

• Lenders funded by Adelaide and Bendigo Bank, such as Tic:Toc, Mortgage House, Yard, and Qantas Money hit some of their variable rates with increases of 0.30% or more.
  
• Commonwealth Bank, Westpac, and Suncorp hiked their packaged and welcome rates.
  
• Cashback for refinancers, no more. Commbank, Westpac, NAB, Suncorp, and ING will officially step back their cashback offers this winter.
  

All makes the graph more impressive!

While offers below 5% are few and far between, there are still some sharp ones available in the Mozo database. Here are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database (1 June 2023)^^

Lowest and average fixed rates — Mozo database (1 June 2023)^^

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.