Key takeaways:
Fixed home loan rates start from around 5.59% p.a. (comparison rate* 6.29% p.a.)
For owner-occupied home loans, recent APRA data shows that the average fixed rate for terms under 3 years is 5.95% p.a., while for terms over 3 years, it is 6.77% p.a.
Fixed rate home loans make up just 2% of new loans in Australia as of May 2024. This is down from around 40% at its peak in 2021.
Compare fixed home loan rates
Here are some of the best fixed rate home loans currently available in Australia. This table shows one-year fixed rate home loans with principal and interest (P&I) repayments, sorted from the lowest interest rate on offer.
Lender & product | Interest rate | Comparison rate* | Notable fees, conditions & features |
Community First Bank - Accelerator Home Loan Fixed | 5.59% p.a. | 6.29% p.a. | - Max LVR: 80% - Offset account - Redraw facility - $395 annual fee |
Macquarie Credit Union - Basic Home Loan Introductory Rate | 5.74% p.a. | 6.74% p.a. | - Max LVR: 80% - Extra repayments allowed - Redraw facility - $250 application fee |
The Capricorn - Premium Choice Home Loan | 5.74% p.a. | 7.31% p.a. | - Max LVR: 80% - Offset account - Redraw facility - Extra repayments allowed |
Illawarra Credit Union - The Works Package Fixed | 5.90% p.a. | 6.73% p.a. | - Max LVR: 95% - $395 annual fee - Split loan option available |
Orange Credit Union - Fixed Rate Home Loan | 5.94% p.a. | 7.30% p.a. | - Max LVR: 95% - Offset account - Redraw facility - $155 application fee |
Australian Mutual Bank - Fixed Rate Home Loan | 5.98% p.a. | 6.47% p.a. | - Max LVR: 95% - Redraw facility - Extra repayments allowed - $250 application fee |
Pacific Mortgage Group - Fixed Home Loan | 5.99% p.a. | 5.90% p.a. | - Max LVR: 80% - Redraw facility - No monthly or annual fees |
Greater Bank - Great Rate Home Loan | 5.99% p.a. | 7.67% p.a. | - Max LVR: 80% - Redraw facility - Cashback offer - $180 settlement fee |
Up Home - Up Home Fixed Term | 6.00% p.a. | 5.96% p.a. | - Max LVR: 90% - Offset account - Redraw facility - No application, monthly or annual fees |
G&C Mutual Bank - Fixed Rate Home Loan | 6.05% p.a. | 6.11% p.a. | - Max LVR: 80% - Redraw facility - Extra repayments allowed - $500 application fee |
Rates are current as of 7 August 2024. This table shows owner-occupier home loans with fixed rates for a one-year period. *Warning: Comparison rates are calculated on a loan amount of $150,000 repaid over a 25-year term with monthly principal and interest (P&I) repayments and an LVR of 80%. Different loan amounts and terms will result in different comparison rates. Check with the lender for full loan details, including rates, fees, eligibility and terms and conditions.
What is a fixed rate home loan?
A fixed rate home loan is a mortgage where the interest rate is locked for a set period - usually between one and five years. This means your repayments won’t change if interest rates go up or down during this time.
When the fixed term ends, your loan usually switches to a variable rate unless you lock in a new fixed term with your lender. Fixed rates have both pros and cons, which we’ll explain further below to help you decide if it’s right for you.
Why do borrowers lock in their rates?
Locking your interest rates protects you from future rate hikes. By fixing your rate for a set period, you ensure that your repayments remain the same, which makes budgeting easier. This can be especially appealing in times of economic uncertainty or when rates are expected to rise, providing peace of mind that your mortgage repayments won’t increase even if rates go up.
Fact: According to the RBA, around 880,000 mortgages with low fixed rates switched to higher variable rates in 2023.
Fixed rate vs variable rate: Key differences
Here are some key differences between fixed and variable rate mortgages:
Fixed rate home loans | Variable rate home loans |
The interest rate stays the same throughout the fixed term, meaning your repayments are consistent and won’t change. | The interest rate can fluctuate based on market conditions, which means your repayments can go up or down. |
You are protected from interest rate increases during the fixed term, but you’ll miss out on lower rates if they fall. | You benefit from potential rate drops, but you are also exposed to the risk of rates increasing. |
Easier to budget and plan as you know exactly what your repayments are going to be for a set period. | Repayments can vary with monthly interest charges, potentially impacting your budget. |
Often comes with fewer features and less flexibility, e.g. limits on extra payments or early repayment options. | Typically offers more flexibility, including options for extra payments and often allows for early repayment. |
May include penalties or fees for breaking the fixed term early or for making extra repayments. | Usually has fewer penalties for extra repayments or loan changes, but terms and conditions can vary by lender. |
You can pick a short or long fixed term based on your financial situation or goals. | It’s easier to refinance your home loan and avoid exit fees. |
Fixed rate home loan features
Below are some important features of fixed rate home loans. It’s helpful to know about them because some might fit your needs better than others.
Rate lock
A rate lock lets you secure your interest rate while you’re applying for the home loan, so you don’t have to wait until settlement. Most lenders charge a fee for this service, usually between 0.15% and 0.20% of your loan amount.
As shown below by Great Southern Bank, this fee can be quite high.
Offset account
Additional repayments
Redraw facility
Flexible repayments
Split loan
Fact: Mortgage brokers are experts on all types of home loans, including fixed rate mortgages. They can access many lenders and fixed rate options, compare rates for you, and recommend the best features based on your needs and goals.
How to choose a fixed rate home loan
Assess your financial needs: Think about your situation and goals, including whether a home loan with a fixed rate will benefit you in the long run.
Talk to a professional: Find out if it’s a good time to lock in your rates by speaking to a mortgage broker. They can offer valuable insights in the home loans market and help you decide what’s best for you.
Look beyond the interest rate: Getting a lower interest rate is important during the fixed period, but the comparison rate could be a red herring. A comparison rate highlights the true cost of a home loan. It includes the interest rate plus fees and charges, expressed as a single percentage. This makes it easier to compare loans and see the overall cost, not just the interest rate.
Take a close look at the fees: The comparison rate for fixed rate home loans can be a little deceiving. It’s based on a 25-year loan term, so once the fixed period ends, the variable rate it rolls onto can greatly affect it. That’s why it’s important to check the fees, including the rate lock fee (if applicable), early or additional repayment fees, application fees, and any ongoing fees.
Consider loan features: Fixed rate home loans usually have fewer features compared to variable loans. However, some lenders might allow extra repayments up to a certain limit. Additionally, some fixed rate loans come with features like an offset account, a redraw facility, or a split loan option.
Understand what happens when the fixed rate period ends: After the fixed rate period ends, you’ll most likely be switched to the lender’s variable rate, which might not be as competitive as the current rates available elsewhere.
Is now a good time to fix your interest rate?
As of mid-2024, the Reserve Bank of Australia (RBA) has maintained a cautious stance on interest rates due to ongoing inflation concerns, holding the cash rate at 4.35%. And as the RBA stated in its latest release, “the economic outlook remains highly uncertain”.
The broad consensus among economists is that interest rates probably won’t drop soon, but might start falling around mid-2025. Right now, the lowest fixed interest rate is about 5.59%, compared to the average fixed rate of around 2% for much of 2021, according to RBA data.
If you think rates might drop and you don’t want to be locked in for a long period of time, considering a shorter fixed rate term of one year might be worth exploring.
That being said, it’s always best to speak to a mortgage broker or financial adviser. They can steer you in the right direction based on your personal circumstances.
FAQs about fixed rate home loans
What is the lowest fixed home loan rate right now?
At the time of publication, the lowest fixed home loan rate we could find is 5.59% p.a. (comparison rate* 6.29%). As explained throughout this guide, the interest rate is important but you shouldn’t look past the loan’s fees, charges, terms and conditions.