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The Mozo database tracks 415 home loans from 96 Australian lenders, so you can compare rates, fees and home loan features side-by-side.
We have spent our days keeping tabs on rates, crunching numbers, and breaking down bank jargon to provide you with practical tips, breaking news and expert analysis since 2008.
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The Reserve Bank of Australia (RBA) decided to keep rates on hold in April.
Many banks and lenders decided to pass on the RBA’s February rate cut to variable borrowers. Plenty of fixed rates were lowered too, with 39 lenders cutting some or all fixed options. To see which lenders recently passed on cuts, you can catch the most up-to-date changes over on our interest rates live blog.
Here’s a breakdown of what happened in March, from Mozo’s latest banking roundup:
ANZ: Trimmed its 1-year fixed rates by up to 25 basis points (bp).
Australian Mutual Bank: Cut fixed rates by 20bp.
Commonwealth Bank:
Homeloans360 & Pacific Mortgage: Slashed rates by up to 105bp.
Macquarie:
If you’re interested in securing a fixed rate, you may want to consider comparing some of the recent winners in Mozo’s Experts Choice Awards for Home Loans.
According to the Mozo database on 1 April, the best fixed home loan rates for owner occupiers with a 20% deposit (80% LVR), making principal & interest repayments on a $400k loan are:
Fixed rate home loans have an interest rate that is locked in, usually for between 1 to 5 years, helping you avoid rate increases and maintain consistent repayments.
The revert rate of fixed rate loans (the rate you’ll get at the end of the fixed period) can be higher than the market rate, so shop around at the end of the fixed term or negotiate a better deal with your lender to avoid getting stung.
The main difference between fixed and variable rate loans is the way the interest rate works: a fixed rate will not change during the fixed period, while a variable rate can go up and down, depending on the market.
But that’s not the only difference.
Lenders often follow a pattern of rate-setting in line with the Reserve Bank of Australia’s (RBA) cash rate.
When a lender sets its fixed rates, it is making a prediction about where interest rates will be in the future.
If they expect the cash rate to rise, they will raise fixed interest rates to be higher than variable rates. If they forecast a falling cash rate, they will decrease their fixed rates.
If fixed rates are set proactively, variable rates are set reactively.
Unlike variable rates, which you can effectively stay on for the lifespan of your home loan, fixed rates are time-limited.
The most common fixed periods offered by Australian home loan lenders are between 1 to 5 years. After the fixed period ends, you’ll be transferred to a variable rate which may be higher than your fixed rate was.
So, if you’re on a fixed rate, make sure you’re ready to refinance by the end of it, or risk paying more interest.
Locking your home loan with a fixed rate provides you with security, knowing your rate won’t change. But your lender wants some security too.
For that reason, if you want to get out of a fixed rate loan early, because variable rates are dropping, or you simply want to refinance to a lower rate, you will have to pay a break fee.
This fee is usually expensive. So, you may find you’re better off financially by sticking with your fixed rate until it ends.
Fixed rates are great for some, but might not be what other borrowers are looking for. Let’s have a look at the pros and cons of fixed rate home loans.
While the average fixed rate home loan tends to come with less features than variable rates do, that doesn’t mean you’ll miss out completely.
Fixed rate home loans can come with:
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Predicting whether interest rates are going to rise or fall is a tough business. So, instead of basing your decision on the cash rate predictions of a handful of big banks, think about it like this: is this home loan affordable now and will I be able to afford it if my rate increases in the future?
That’s not to say you shouldn’t keep up with interest rate news to help you round out your knowledge. But, deciding whether to go with a fixed or variable rate is a matter of considering your own financial situation, circumstances, and observations.
If, as predicted, Australians are gearing up for a cash rate cut in 2025, then fixing your rate in January, if even for a year, might mean you’re locked into a fixed rate while variable rates start to plummet.
However, the RBA was expected to cut the cash rate in the last quarter of last year. So, nobody really knows when it’ll happen (apart from the RBA itself).
The point being, your choice to get a fixed rate home loan should be based on a mixture of your immediate circumstances (Can I afford it right now?) and your future circumstances (Will I be able to afford this if something changes later?).
When you are choosing between fixed interest home loans, there are a few key points to consider:
Once you’ve had a think about these questions, you’ll be on track to compare fixed interest rates.
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Yes, you can get a fixed rate home loan with interest-only repayments. However, it’s not as common as other types of home loans, with only a handful of lenders in the Mozo database offering this type of lending.
If you don’t have a full 20% deposit, you may still qualify for a fixed rate home loan from a range of lenders. However, unless you’re applying for a first home buyer scheme, you may be required to pay for lenders mortgage insurance (LMI).
Yes, you can usually make additional repayments on a fixed rate home loan. However, this may be subject to an additional fee, or capped at a certain limit per month. You may also be able to redraw your additional payments from some lenders, sometimes for free or for a small fee.
When your fixed rate home loan ends, your interest rate will revert to a variable rate. This rate may be higher than what you were paying during the fixed period. So, be ready to refinance your home loan to a new rate, or risk paying more interest.
You can get out of a fixed rate early, but you may be charged an expensive break fee.
Yes, you can refinance during the fixed period of your home loan, but you will likely be charged a break cost.
If you sell during the fixed period, you may be charged a break cost, same as if you wanted to get out of or refinance your fixed rate early.
If you’ve got more questions about home loans, from the basics of how they work, to when the right time to make an offer on a property is, check out our home loan FAQs page.
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