RBA hold confuses the home loan decision: Should you go fixed, variable or split?

Two storey house
Image: Getty, two storey house

With the Reserve Bank holding interest rates at 4.35% this March, how should home buyers now consider their home loan interest rate?

It can be tricky. The average variable home loan rate is currently 6.82% p.a., as per the Mozo database, but it seems likely to drop in the not too distant future. Though no one is certain when.

At a glance, variable home loan rates seem a bit high right now. Consider some of the options from major banks, such as CommBank’s Extra Home Loan at 6.79% p.a. (7.06% p.a. comparison rate), NAB’s Base Variable Rate Home Loan at 6.84% p.a. (6.88% p.a. comparison rate), ANZ’s Simplicity Plus Special at 6.64% p.a. (6.64% p.a. comparison rate) and Westpac’s Flexi First Option Home Loan Special at 6.54% p.a. (6.86% p.a. comparison rate).

There’s not a lot of variability here, so to speak. 

However, our recent Mozo Home Loan Report showed that smaller banks can save borrowers money with some much more attractive variable rates: G&C Mutual’s Essential Worker Home Loan offers 5.80% p.a. (5.83% comparison rate), Homeloans360’s Owner Variable Home Loan is at 5.89% p.a. (5.89% p.a. comparison rate) and Community First Bank’s Basic Variable Home Loan at 5.94% p.a. (5.99% p.a. comparison rate), for example.

Again, it’s hard to know if these rates will move. Could it be a better bet to fix for a short while?

The question of fixing: Fixed home loans in focus

There have been some good looking deals in fixed home loans of late. Though it’s hard to know if fixing for two or three years is worth the gamble.

Still, for argument’s sake, let’s consider a few of the better moves in early 2024. Take AMP Bank, which recently reduced rates for all of its fixed term home loans by up to 50 basis points, with its 3-year rate now coming in at 5.99% p.a. (6.68% p.a. comparison rate). Some competitors are offering even better on 3-year terms: for example, Bank Australia’s Clean Energy Option is now at 5.79% p.a. for 3 years (6.43% p.a. comparison rate), while Well Money has dropped its 3-year fixed rate to 5.89% p.a. (comparison rate 6.49% p.a.).

Both ING and Qantas Money also got in on the act recently, coming down on 3 years fixed to 6.12% p.a. (both comparison rates). Further still, one of the more impressive options right now is from Australian Mutual Bank which has a 5.48% p.a. fixed rate for 3 years (6.24% p.a. comparison rate. This is the leading 3-year fixed rate in the Mozo database and is among the best fixed rates all up.

But Mozo’s Home Loan Expert, Peter Marshall says there is a risk with fixing rate right now because if the RBA has it wrong and needs to cut hard later this year, these fixed options could leave homeowners paying much more than needed and for quite a while. 

“We've seen the RBA send a wrong message about the future of interest rates before, so we should not rule it out from happening again,” Marshall says.

“Banks are also very good at setting rates so that they do not lose. This means that those who have rates at 5.69% now believe that within three years rates will be lower than that - and possibly much lower. Never bet against the banks!”

Better to consider a split rate loan?

Notably, Mozo’s Home Loan Report found that 7% of borrowers don’t know their home loan type, despite it having a big impact on repayments. 

And yet, knowing how a loan works and getting a good interest rate only takes a bit of research. It also allows you to explore a few options, including the often forgotten 'split rate' home loan. When you have a split loan, one portion is charged interest at a variable rate, while the other portion is charged interest at a fixed rate.

So put simply, split rate home loans can be quite handy when borrowers face a tricky economy and uncertainty around interest rate movements. In a way, they offer borrowers a sense of stability and balance. They also give them the assurance of fixed rates while benefiting from potential variable rate cuts.

Marshall says split loans can certainly be a safer option, where you get the risks and benefits from both rate types. 

“My personal view is that rates will fall harder and faster than almost anyone is talking about right now,” Marshall says. 

If that’s the case, a split home loan might be the best way to play this currently unpredictable home loan landscape. 

If you're in the market for a home loan, let us help you do the heavy lifting. Our home loan experts handpick some of the best home loans on the market in an effort to make comparing interest rates and features easier. Start comparing below!

Last updated 27 April 2025 Important disclosures and comparison rate warning*
What are your home loan needs?
Loan purpose
Buying or Refinancing
  • Promoted

    Unloan Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 20% min deposit
    • Redraw available
    Interest rate
    5.74 % p.a.
    Variable
    Comparison rate
    5.65 % p.a.
    Initial monthly repayment
    $2,915
    Go to site
    • Built by CommBank
    • The first home loan with an increasing discount (conditions apply)
    • No application or banking fees
  • Promoted

    Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 10% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.78 % p.a.
    Variable
    Comparison rate
    5.82 % p.a.
    Initial monthly repayment
    $2,927
    Go to site
    • $0 application fee to pay
    • Unlimited additional repayments
    • Apply in as little as 15 minutes
  • Promoted

    Fixed Rate Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 5% min deposit
    Interest rate
    5.49 % p.a.
    Fixed 2 years
    Comparison rate
    5.91 % p.a.
    Initial monthly repayment
    $2,836
    Go to site
    • No ongoing annual fees
    • Make up to $25,000 extra repayments during a fixed period, fee free (T&Cs apply)
    • Lock in for up to 5 years.
  • Promoted

    Fixed Rate Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • Interest only
    • 20% min deposit
    Interest rate
    5.49 % p.a.
    Fixed 2 years
    Comparison rate
    5.96 % p.a.
    Initial monthly repayment
    $2,836
    Go to site
    • Free extra repayments of up to $25,000 during the fixed rate period.
    • Split loan available
    • Weekly, fortnightly, or monthly repayment options
  • Promoted

    Variable Home Loan 90

    • Owner occupier
    • Principal & Interest
    • 10% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.79 % p.a.
    Variable
    Comparison rate
    5.83 % p.a.
    Initial monthly repayment
    $2,931
    Go to site
    • No monthly or ongoing fees
    • Option to add an offset for 0.10% p.a.
  • 2-Year Discounted - Simple Home Loan Variable

    • Owner occupier
    • Principal & Interest
    • 40% min deposit
    • Redraw available
    Interest rate
    5.49 % p.a.
    Variable for 24 months and then 5.74% p.a.
    Comparison rate
    5.69 % p.a.
    Initial monthly repayment
    $2,836
    Go to site
  • Fixed Rate Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 5% min deposit
    Interest rate
    5.49 % p.a.
    Fixed 2 years
    Comparison rate
    5.91 % p.a.
    Initial monthly repayment
    $2,836
    Go to site
    • No ongoing annual fees
    • Make up to $25,000 extra repayments during a fixed period, fee free (T&Cs apply)
    • Lock in for up to 5 years.
  • Fixed Rate Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • Interest only
    • 20% min deposit
    Interest rate
    5.49 % p.a.
    Fixed 2 years
    Comparison rate
    5.96 % p.a.
    Initial monthly repayment
    $2,836
    Go to site
    • Free extra repayments of up to $25,000 during the fixed rate period.
    • Split loan available
    • Weekly, fortnightly, or monthly repayment options
  • Discounted Complete Package Home Loan

    • Owner occupier
    • Principal & Interest
    • 40% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.64 % p.a.
    Variable for 24 months and then 5.89% p.a.
    Comparison rate
    6.18 % p.a.
    Initial monthly repayment
    $2,883
    Go to site
    • 100% offset account
    • Make additional repayments at any time
    • Get a fee-free credit card (T&Cs apply)
  • Home Loan

    • Owner occupier
    • Principal & Interest
    • 40% min deposit
    • Redraw available
    Interest rate
    5.69 % p.a.
    Variable
    Comparison rate
    5.70 % p.a.
    Initial monthly repayment
    $2,899
    Go to site
    • Offset and non-offset options for flexible payments
    • No application and monthly account keeping fees
    • Get up to $4,000 cashback (T&Cs apply)
Showing 8 results from 415 home loans. Use the filters to see more

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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.

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Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

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