Compare Fixed Rate Home Loans

Fixed home loan rates

To fix or not to fix? That is the question posed by many home buyers across Australia. To help you decide whether a fixed or variable interest rate is your borrowing match, we've compiled this quick guide that runs through the benefits of a fixed interest rate and the traps to watch out for. You can also use the above table to compare fixed rate home loans quickly and easily.

Fixed rate loans, what do you need to know? 

A fixed home loan rate, as the name suggests, is an interest rate that is set for a fixed period of time. Most banks offer fixed rate terms of between one and five years, though some let you lock in a rate for as many as ten years. During this period you won’t be affected by any rate changes, meaning your repayments will stay the same and can budget accordingly.

At the end of the fixed period, borrowers will have the option to select another fixed term or switch to a variable rate loan. The revert rate - that is, the rate that the home loan will automatically revert to if no decision is made - is usually higher than the market rate, so be prepared to shop around at the end of the term or negotiate a better deal with your lender to avoid getting stung.

How does a fixed rate home loan compare on features? 

There was a time when if you took out a fixed home loan you had to give up many of the features typical of most variable rate home loans, such as offset accounts and the ability to make extra repayments. Nowadays, this isn’t necessarily the case. Many fixed home loans offer the same range of features, though there are usually restrictions you’ll have to weigh up beforehand.

• Extra repayments: With a fixed rate home loan you may be able to make extra repayments but generally there will be a cap or limit to how much you can make each year or over the term of the loan.
• Redraw. If you can make extra repayments you may also have the ability to redraw this amount. With fixed rate home loans generally there will be a fee for this and a minimum redraw amount.
• Offset account: Some fixed loans will have an offset loan facility but unlike a variable rate home loan where you can offset 100% of the loan amount, with a fixed rate home loan you will only be able to offset a portion say 10 - 40% of the loan.
• Repayment flexibility: Fixed rate home loans will enable you to select the repayment frequency that suits you, the same as a variable loan. Options include weekly, fortnightly and monthly repayments.
• Loan-to-Value ratio: Fixed home loan rates have different LVR requirements to variable rate loans so while you might need an LVR of 80% for a variable rate loan you may only need a LVR of 90% for a fixed term loan. 
• Split loan: Many fixed rate loans will have the option of splitting a portion of the fixed loan with a variable rate. There may be some limits to how much you can split but it can mean that you get the benefits of rate certainty for the fixed portion of your loan and added flexibility on the variable.

What about price?

When the Reserve Bank of Australia cut interest rates and commenced its bond purchasing activities in March 2020, the majority of banks and lenders responded by cutting fixed rates and leaving variable rates unchanged. This shift saw fixed rates quickly overtake variable rates as the cheaper of the two. In fact, as of 3 June 2020, the average fixed rate among lenders we track sits a full percentage point lower than the average variable rate — 2.27% p.a. compared to 3.27% p.a.

So if you’ve decided that a fixed interest rate home loan is the right pick for you, then you’re going to have to start shopping around. Head on over to our Home Loan Interest Rates page for more information about comparing fixed rate home loans. 

JP Pelosi

Managing editor

Jean-Paul (JP) Pelosi is an experienced journalist and editor who has contributed to many of Australia's leading media outlets including The Guardian, News.com.au, Domain.com.au, Investment Magazine and ANZ's Bluenotes. He has also edited news and communications for large financial services companies such as CommBank, Suncorp, Allianz and Amex. He loves a well told story and applying his editorial experience to content that readers both care about and enjoy. JP heads up our writing team.