May home loan snapshot: Most fixed rates below '2' are gone

happy couple with their new house key

We can officially say goodbye to most of the fixed rates below a 2% p.a. in our database. Last week, G&C Mutual Bank’s ultra-low 1-year fixed rate of 1.98% p.a. (1.99% p.a. comparison rate*) jumped to 2.89% p.a. (2.94% p.a. comparison rate*).

Now the only loan in our database with a fixed rate starting with a ‘1’ is Unity Bank’s 1.84% p.a. (4.05% p.a. comparison rate*) offer on a 1-year term —which is exclusive to first home buyers.

Many economists expect the Reserve Bank of Australia’s (RBA) cash rate increase announcement to come sooner rather than later in light of the Australian Bureau of Statistics’ Consumer Price Index rising to 5.1% this quarter.

The question is: How is this affecting the home loan market? Well for starters the RBA monitors inflation and raises it when it thinks inflation is too high. Doing this makes borrowing money (like a home loan) more expensive. That’s why we’ve been seeing many banks increasing their rates across the board.

What does this mean for you, the homebuyer? Well, it’s going to be expensive to buy a home even if house prices go down. That’s because with higher interest rates come higher monthly mortgage repayments. And, of course, tough approval requirements from lenders have been the norm since the pandemic

So which lenders have raised their rates? What do the lowest and average home loan rates in the Mozo database look like? And how are variable home loan rates faring? Find out below.

Recent fixed and variable rate movements

Since the start of April, 71 of the 90 lenders tracked in the Mozo database made changes to fixed rates in the last month. The biggest changes came from longer terms, with a 60bp increase in the lowest rate for four year terms. Below are some notable changes.

In the fixed rates space our database saw these major changes:

  • All four major banks increased their fixed rates by at least 20-40 bps.
  • There was a major increase from Citi, its rates increased by 110 or 120 bp. Now its best fixed rate starts at 3.79% p.a. (3.79% p.a. comparison rate*)
  • Greater Bank increased all its fixed rates by 35-60bp but still has a low rate from 2.59% p.a. (2.23 p.a. comparison rate*) for 1 year terms.

Meanwhile, the notable variable rate changes came from:

  • Bendigo Bank increased its Complete Home Loan by 10bp, now starting from 2.29% p.a. (2.53% p.a. comparison rate*).
  • HSBC lifted variable rates on several of its home loans. Now its lowest loan is the Discounted Home Value loan for 70% LVR starts at 2.27%.

Average home loan rates

The average fixed home loan for four year terms (the red line) in our database jumped from 2.38% to 4.05% in a year–a 167 basis point difference and one of the biggest jumps within all fixed term rates. Below you can see the massive jumps between each of the term years.

You can go to our Australian home loan statistic page if you want to find more graphs for average home loan rates and lending volumes.

Lowest home loan rates

Even with rate increases across the board, there are still several leaders holding the rank of cheapest home loans in our database. Here’s a look at the lowest variable and fixed mortgage rates and LVR <80%.

Lowest variable rates — Mozo database (May 2, 2022)^^

LenderLoanVariable rate
Reduce Home LoansSuper Saver1.79% p.a. (1.88% p.a. comparison rate*)
Well Home LoansWell Balanced1.85% p.a. (1.88% p.a. comparison rate*)
Homeloans360Owner Variable1.87% p.a. (1.87% p.a. comparison rate*)
Pacific Mortgage GroupStandard Variable1.87% p.a. (1.87% p.a. comparison rate*)
loans.com.auGreen Home Loan1.88% p.a. (2.30% p.a. comparison rate*)

Lowest and average fixed rates — Mozo database (May 2, 2022)^^

TermRate leaderFixed rate
1-yearUnity Bank1.84% p.a. (4.05% p.a. comparison rate*)
2-yearOrange Credit Union2.45% p.a. (2.87% p.a. comparison rate*)
3-yearOrange Credit Union2.99% p.a. (2.97% p.a. comparison rate*)
4-yearSouthern Cross Credit Union3.69% p.a. (3.11% p.a. comparison rate*)
5-yearAustralian Unity3.84% p.a. (3.35% p.a. comparison rate*)

It’s worth remembering that these are the lowest rates available in our database for borrowers with an <80% LVR. There are even lower rates on offer to borrowers with LVRs below 70% and 60%.

Thinking about a property or looking to refinance your existing mortgage? Use Mozo’s handy home loan comparison table to examine lenders side-by-side.

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

Home loan comparisons on Mozo - last updated 13 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
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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, 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.

^See information about the Mozo Experts Choice Home Loan Awards

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