October home loan snapshot: Interest rates continue to increase

The Reserve Bank of Australia has lifted interest rates at a rapid pace this year, most recently by 0.25% at its October meeting. Economists at all four major banks expect the tightening cycle to continue as the central bank ramps up its efforts to tame inflation.

As in previous months, the majority of lenders quickly announced they would be passing on the RBA rate rise to their customers in full, meaning borrowers not on a fixed rate will be looking at another big jump in their monthly repayments.

The run-up in interest rates has seen potential buyers' borrowing power decrease, but property prices are also edging down. So far, however, the bulk of price drops has been on the more expensive end of the market.

So how are variable rates and fixed rates faring at the moment? Find out below.

Average fixed home loan rate now above the 5% mark

The ultra low fixed rates many had gotten accustomed to during the pandemic period have long disappeared. These days, the majority of fixed rates begin with a 4 or 5. 

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

• 1-year: 5.14% p.a.
  
• 2-year: 5.61% p.a.
  
• 3-year: 5.86% p.a.
  
• 4-year: 6.13% p.a.
  
• 5-year: 6.34% p.a.

Recent fixed and variable interest rate movements

We’ve seen increases across all home loan products in our database. In fact, over September, there were 1,791 increases in variable home loan products and 496 in the fixed home loan products we track.

Here are some notable changes from the last month.

Variable home loans

• Bendigo Bank’s Complete Home Loan rates were increased by 30 bp for LVR’s below 80% and 50 bp for higher LVRs, and all rates for its Express Home Loan were increased by 30 basis points.
• ubank rates increased by between 15 to 55 basis points depending on loan and borrower type. Its lowest variable rate is currently at 4.14% p.a. (4.16% p.a comparison rate*).
• Commonwealth Bank increased rates on its Extra Home Loan by 40 basis points for most borrower types.

Fixed rate home loans

• ANZ lifted its 1-year fixed rates by 50 basis points for owner occupiers and 30 basis points for
  investors.
• Commonwealth Bank increased some of its 1-year fixed rates, but cut its 3 year fixed home loan option by 105 basis points.
• St George’s 2-year fixed home loan rates are down by 15 basis points.

Lowest home loan rates

Even though interest rates are trending upwards, there are still a few variable and fixed rates below the 4% p.a. mark in the Mozo database. Below are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database (October 18, 2022)^^

Lowest fixed rates — Mozo database (October 18, 2022)^^

These are the lowest rates available in our database for borrowers with an <80% LVR. More competitive rates are available for borrowers with LVRs below 70% and 60%.

Thinking about buying a property or looking to refinance your existing mortgage? Visit Mozo’s handy home loan comparison table to examine lenders side-by-side, or use our rate change 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.