Why locking in a fixed rate home loan now could be a smart money move
If you’re one of the many mortgage holders across Australia right now desperate for the RBA to cut the cash rate to help ease up your finances, we have some news for you. Holding out for the RBA to make a move sometime in the new year is not your only option to save some dollars on your home loan.
In recent months, many banks have been making generous cuts to fixed rate home loans and right now many one and two year fixed deals are a whole percent or more lower than the average big 4 variable rate, which is sitting at 7.19% according to our database^.
To put this into perspective, a 1% lower rate than the average big 4 rate translates to a monthly saving of $315 (on a $500K loan over 25 years).
The RBA would need to cut rates at the standard 0.25% at least four times for variable rates to drop by 1% so locking in a low rate now could work in your favour.
Take Bendigo Bank’s 2 year fixed rate home for example. It currently has a rate of 5.54% p.a (xx comparison,) and for borrowers with 30% equity, the Macquarie Fixed Offset has a headline rate of a competitive 5.69% for 2-5 year terms.
And while no one can predict the future with certainty, the peace of mind and payment stability a fixed rate brings can be worth every dollar.
Many lenders also offer fixed-rate options with flexible features like offset accounts or extra repayment capabilities so you can still put extra cash into your mortgage to save even more.
But what about the risks of fixing now? No one knows what rates will do next year, so there is a chance that rates could drop more and you’ll be stuck on a higher rate for a period of time. There’s also break fees to consider if you need to leave the loan earlier than the agreed term.
It’s a good idea to choose a fixed term that delivers you some savings now but isn’t so long into the future that if your circumstances change you wouldn’t be able to see out the loan term.
Latest fixed rate home loans deals on Mozo
Bendigo Bank Express Fixed Home Loan
- 5.54% p.a. 2 year fixed rate (6.11% p.a. comparison rate*)
- Offset account and redraw facility
- 2024 Mozo Experts Choice Exceptional Home Lender^
The online-only Express Home Loan allows live-in borrowers to lock in a 2 year fixed rate of 5.54% p.a. (6.11% p.a. comparison rate*). Other fixed rate terms are available up to 5 years. You'll also net features to help you save on interest including an offset account, redraw facility and the ability to make free extra repayments (of up to 20% in fixed period). You can borrow up to $10 million and have the flexibility to split. Only a 10% deposit is required. Keep in mind that there is a $10 monthly service fee and a $134 electronic valuation fee.
Macquarie Basic 5 year Fixed Home Loan
- 5 year fixed rate of 5.69% p.a (5.97% p.a. comparison) for live in borrowers with a 70% LVR
- No annual or application fee
- Fast turnaround times
The key essentials of a great value home loan are low rates and low fees, and the Macquarie Fixed Basic home loan has both. For owner-occupiers, you’ll have a range of fixed terms to choose from 1 to 5 years and interest rates are scaled depending on your loan to value ratio. The 5 year rate is a low 5.69% p.a. (5.97% p.a.) for borrowers with at least 30% deposit or equity. The loan also does away with common fees so you won’t pay an application, monthly or an annual loan fee (but there are break cost fees if you do need to exit the loan early). You can make up to $10,000 a year in extra repayments and access them via a redraw. There is also a split loan option but no offset account. The loan is 100% digital and Macquarie boasts market-leading turnaround times and a straightforward application.
IMB Bank 2 year Fixed Rate Home Loan
- 5.69% p.a. 2 year fixed rate (6.28% p.a. comparison rate*)
- Up to $4,000 cashback (T&Cs apply)
- Free internet and mobile banking redraws
Get the peace of mind of a competitive fixed rate home loan for 2 years with IMB and score up to $4,000 cashback in your pocket once approved (T&Cs apply). You have the freedom to make up to 12 months repayments in advance without penalties, plus you’ll have free Internet and Mobile Banking redraws (T&Cs apply). There’s only a 5% deposit required and you have the flexibility to split your home loan as required. No offset account.
HSBC Fixed Rate Home Loan
- 5.59% p.a. 2 year fixed rate (6.40% p.a. comparison rate*)
- Split your home loan between fixed and variable
- Bonus cashback offer (T&Cs apply)
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Get repayment certainty with HSBC’s low 2 Year Fixed Rate Home Loan. Make up to $10,000 of extra repayments a year and have the option to split your home loan between fixed and variable. Plus, you could score $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 28 February 2023 and settle by 30 April 2023.
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^According to the Mozo Database as at 12/11/2024 based on an owner occupied variable rate home loan of $400,000 over 25 years with a LVR <80%.
* 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.
^See information about the Mozo Experts Choice Home Loan Awards
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