Fixed rates are a popular mortgage type, designed to give peace of mind for your budgeting. However, there are a few things to keep in mind before you lock in your home loan rate. 

fixed rate

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2.99%

Fixed - 3 years

3.45%

UBank

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.42

/ 5
More details

3.49%

Fixed - 5 years

3.85%

UBank

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.05

/ 5
More details

3.19%

Fixed - 5 years

3.44%

UBank

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.51

/ 5
More details

3.19%

Fixed - 3 years

3.74%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.96

/ 5
More details

3.49%

Fixed - 1 year

3.81%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.72

/ 5
More details

3.79%

Fixed - 5 years

3.95%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.17

/ 5
More details

3.14%

Fixed - 2 years

3.75%

Heritage Bank

$1.4k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.92

/ 5
More details

3.79%

Fixed - 5 years

4.55%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.11

/ 5
More details

2.99%

Fixed - 1 year

3.63%

UBank

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.99

/ 5
More details

3.99%

Fixed - 1 year

4.21%

Heritage Bank

$1.6k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.19

/ 5
More details

2.89%

Fixed - 2 years

3.31%

Virgin Money

$1.4k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.88

/ 5
More details

3.59%

Fixed - 3 years

4.14%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.46

/ 5
More details

3.59%

Fixed - 2 years

4.15%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.39

/ 5
More details

3.99%

Fixed - 2 years

3.63%

Virgin Money

$1.6k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.17

/ 5
More details

4.19%

Fixed - 5 years

4.35%

Heritage Bank

$1.6k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

2.67

/ 5
More details

3.74%

Fixed - 2 years

3.84%

Virgin Money

$1.5k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.23

/ 5
More details

3.49%

Fixed - 1 year

4.86%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

1.93

/ 5
More details

3.99%

Fixed - 1 year

5.40%

Heritage Bank

$1.6k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

1.84

/ 5
More details

3.24%

Fixed - 1 year

4.26%

Newcastle Permanent

$1.5k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

2.81

/ 5
More details

2.96%

Fixed - 3 years

3.16%

Mortgage House

$1.4k

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.78

/ 5
More details

Learn more about home loans

The benefits of a fixed rate home loan

Fixed rate home loans let you lock in an interest rate for a period of time, typically 1-5 years. This allows for stability in your finances and simpler budgeting, as your repayment amounts will stay the same for the fixed period. Some lenders may offer fixed rate home loans for up to 10 years, but it’s not common. 

A major benefit of a fixed rate mortgage is the certainty it provides. As long as your circumstances stay the same, if you can afford repayments this month then you can afford them the next. If you’re the type of person who likes stability in your budget, a fixed rate home loan may suit you.

Further, if the Reserve Bank of Australia (RBA) increases the cash rate, you’ll be protected from potential rate hikes. 

Fixed versus variable home loans

As mentioned above, by fixing your interest rate, you’ll know in advance just how much your mortgage repayments will cost from month to month. Even if your lender raises its variable interest rates, your home loan’s fixed repayments will remain the same during the fixed term.

On the other hand, if your bank cuts variable home loan rates, this won’t pass on to your loan. You’ll keep making the same interest payments until your fixed term ends. Also, fixed rate home loans are more likely to hit you with significant break fees if you try to refinance.

Most interest rates can only be fixed for a limited number of years, and afterwards will revert to the lender’s standard variable rate. If you don’t plan accordingly, you could find yourself feeling the pinch by a sudden jump in repayments, especially if interest rates rose significantly during your loan’s fixed term.  

Variable rate home loans typically come with greater features, such as a redraw facility and/or an offset account. While fixed rate loans can also offer these features, you may end up paying much higher rates to afford them. 

Pros and cons of a fixed rate home loan:

  • Stability in your finances
  • Simpler budgeting
  • Certainty of repayment amounts
  • Less loan features
  • Rate won't drop if cash rate cut
  • Potential break fees

Historically, have fixed or variable rates come out on top?

It’s generally agreed that you cannot predict the bottom of the market. If you look at the history of home loan rates, it’s no clearer which option will be better.

RateCity research found that fixing in October 2005 would have saved borrowers 15 per cent, or around $12,200 compared to variable over the following three years. Fixing a home loan rate in September 1991 would have cost a borrower an extra 30 per cent, or $29,800, over the next three years.

Hidden traps of a fixed rate home loan

Fixed rate home loans are fairly straightforward. You’ll lock in a rate and pay a set amount over the fixed period. However, there are some things borrowers should keep in mind:

  • Revert rates: Once the fixed rate period ends, you’ll have the choice of switching to another fixed rate or a variable rate home loan. If you choose variable, your loan will typically revert to your lender’s standard variable rate. This is generally higher than average variable rate on the market. 
  • Compare your options: If your fixed rate period is coming to an end, this is the perfect time to shop around and compare your options. Check out what your lender is offering new customers (fixed and variable rates) and what lower rates are on offer from competitors. Use this research to negotiate a more competitive rate with your lender, or even consider refinancing (only if it suits your personal finances). 
  • Breaking the fixed term: As mentioned above, break fees for ending a fixed rate home loan early can really sting. Make sure you understand the potential costs if you are set on leaving your fixed rate early. 

Frequently asked questions

What is the difference between fixed, variable and split rates?

Fixed rate

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

What is the difference between a fixed rate and variable rate?

A variable rate can fluctuate over the life of a loan as determined by your lender. While the rate is broadly reflective of market conditions, including the Reserve Bank’s cash rate, it is by no means the sole determining factor in your bank’s decision-making process.

A fixed rate is one which is set for a period of time, regardless of market fluctuations. Fixed rates can be as short as one year or as long as 15 years however after this time it will revert to a variable rate, unless you negotiate with your bank to enter into another fixed term agreement

Variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts however fixed rates do offer customers a level of security by knowing exactly how much they need to set aside each month.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

What is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

What is a standard variable rate (SVR)?

The standard variable rate (SVR) is the interest rate a lender applies to their standard home loan. It is a variable interest rate which is normally used as a benchmark from which they price their other variable rate home loan products.

A standard variable rate home loan typically includes most, if not all the features the lender has on offer, such as an offset account, but it often comes with a higher interest rate attached than their most ‘basic’ product on offer (usually referred to as their basic variable rate mortgage).

Does the Rate Guarantee apply to discounted interest rate offers, such as honeymoon rates?

No. Temporary discounts to home loan interest rates will expire after a limited time, so they aren’t valid for comparing home loans as part of the Rate Guarantee.

However, if your home loan has been discounted from the lender’s standard rate on a permanent basis, you can check if we can find an even lower rate that could apply to you.

What is a honeymoon rate and honeymoon period?

Also known as the ‘introductory rate’ or ‘bait rate’, a honeymoon rate is a special low interest rate applied to loans for an initial period to attract more borrowers. The honeymoon period when this lower rate applies usually varies from six months to one year. The rate can be fixed, capped or variable for the first 12 months of the loan. At the end of the term, the loan reverts to the standard variable rate.

What is the Rate Guarantee?

The Rate Guarantee is RateCity putting its money where its mouth is. We believe that too many Australians are paying too much for their home loans. We’re so confident we can help Aussies save money, if we can’t beat your current rate, we’ll give you a $100 gift card.*

There are three reasons it pays to check your rate with the RateCity Rate Guarantee:

  • You can find out how much you could save on your home loan by switching to a loan with a lower interest rate
  • If we can’t beat your current rate, you can claim a $100 gift card with our Rate Guarantee*
  • Everyone who checks their home loan will be entered in the draw for a chance to win $1 million!^

What is a split home loan?

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

What is principal and interest'?

‘Principal and interest’ loans are the most common type of home loans on the market. The principal part of the loan is the initial sum lent to the customer and the interest is the money paid on top of this, at the agreed interest rate, until the end of the loan.

By reducing the principal amount, the total of interest charged will also become smaller until eventually the debt is paid off in full.

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

Are bad credit home loans dangerous?

Bad credit home loans can be dangerous if the borrower signs up for a loan they’ll struggle to repay. This might occur if the borrower takes out a mortgage at the limit of their financial capacity, especially if they have some combination of a low income, an insecure job and poor savings habits.

Bad credit home loans can also be dangerous if the borrower buys a home in a stagnant or falling market – because if the home has to be sold, they might be left with ‘negative equity’ (where the home is worth less than the mortgage).

That said, bad credit home loans can work out well if the borrower is able to repay the mortgage – for example, if they borrow conservatively, have a decent income, a secure job and good savings habits. Another good sign is if the borrower buys a property in a market that is likely to rise over the long term.

What is a guarantor?

A guarantor is someone who provides a legally binding promise that they will pay off a mortgage if the principal borrower fails to do so.

Often, guarantors are parents in a solid financial position, while the principal borrower is a child in a weaker financial position who is struggling to enter the property market.

Lenders usually regard borrowers as less risky when they have a guarantor – and therefore may charge lower interest rates or even approve mortgages they would have otherwise rejected.

However, if the borrower falls behind on their repayments, the lender might chase the guarantor for payment. In some circumstances, the lender might even seize and sell the guarantor’s property to recoup their money.

Why do people use no credit check loans?

How do I know if I have to pay LMI?

Each lender has its own policies, but as a general rule you will have to pay lender’s mortgage insurance (LMI) if your loan-to-value ratio (LVR) exceeds 80 per cent. This applies whether you’re taking out a new home loan or you’re refinancing.

If you’re looking to buy a property, you can use this LMI calculator to work out how much you’re likely to be charged in LMI.

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

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