September home loan snapshot: Spring property blooms, along with interest rates

The last half of winter was all quiet on the Reserve Bank front. But home loan interest rates? Astonishingly busy. But despite all the activity, from hikes to cuts, the average variable interest rate for owner-occupied home loans stayed at 6.60% p.a. in August. 

Heading into September, the RBA interest rate decision once more left the official cash rate on hold at 4.10%. With every passing month, it becomes more and more likely we’ve hit the interest rate peak, though Mozo banking expert Peter Marshall says not to get too comfortable yet. 

“It’s probably not going to be until the first quarter of next year that we can actually feel comfortable that the rate cycle is over,” explains Marshall.

“It will take a bit longer to ensure that the key economic indicators are going in the right direction. But once that happens, people can stop worrying about increasing prices on their mortgages.” 

With inflation gradually returning to target, the odds become more and more likely that the next official interest rate change will be a cut – most likely in mid to late 2024. Great news for variable rate borrowers; less good for variable rate savers. 

In the meantime, the spring property season has kicked off, so there are more properties hitting the market. If you’re considering becoming a home buyer, let’s break down what’s happening in home loans as the flowers start to bloom. 

Head to our RBA rate tracker for more information on how RBA decisions affect home loans.

Unfortunately, plenty of fixed home loans ticked up in August, but plenty more slashed their fixed rates, including major lenders like Bendigo Bank, ING, CommBank, and Macquarie. Since fixed rates are predictive, lenders reducing rates signals that they believe official interest rates have peaked. 

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: 6.36% p.a. 
• 2-year: 6.57% p.a. 
• 3-year: 6.60% p.a. 
• 4-year: 6.50% p.a. 
• 5-year: 6.49% p.a.

Large and small home loan lenders alike lifted variable interest rates in August. Most of the adjustments were less than 15 basis points, but even 5 bp means extra dollars to mortgage repayments. Out-of-cycle rate hikes are quite annoying, especially when accompanied by a flurry of cuts to savings accounts and term deposits, but not every lender is guilty of this sin. 

Here are some of the highlights from August. 

• Bank Australia raised its Premium Home Loan Package rates by 9 bp. 
• Bank of Queensland and subsidiary brands ME and Virgin Money lifted rates between 5 and 40 bp. 
• CommBank inched up one of its lowest home loan offers by 5 bp. NAB did the same thing to its lowest offer but increased by 15 bp. Even Unloan, known for its unique rate discount, hiked by 15 bp. 
• Tic:Toc broke from the pack by cutting its headline rate by 5 bp. 

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

Lowest variable rates — Mozo database (5 September 2023)^^

Lowest and average fixed rates — Mozo database (5 September 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.

Compare home loans in the table below.