Data shows fixed-rate loans now make up nearly half of the total mortgage market, growing from humble beginnings only a few years ago. This is because banks and lenders are offering increasingly competitive interest rates on three-year fixed-rate loans, and borrowers are flocking to them.

Reserve Bank data also highlights a recent phenomenon where the average three-year fixed rate is now more competitive than its variable rate counterparts.

3 Year Fixed-rate Home Loans

Below is a selection of sharp deals on three-year fixed-rate home loans for owner occupiers and investors.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
5.80% p.a.
5.91% p.a.
Principal & Interest
6.19% p.a.
7.78% p.a.
Principal & Interest
5.99% p.a.
6.32% p.a.
Principal & Interest
5.89% p.a.
7.36% p.a.
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

What happens after my fixed period ends?

If you’ve made it to the end of your fixed loan period, first of all congratulations. And second, you’re probably wondering what to do next.

Once a fixed period comes to an end, a lender will usually offer you the opportunity to re-fix on another rate, or to 'revert' to a variable rate. If no action is taken, a lender will usually automatically place you on what’s called a revert rate.

A lender’s revert rate could either be its standard variable rate, or some other specialised interest rate. Either way, there’s a good chance this rate could be higher than what you were paying previously, so the end of the fixed term can be a good time to shop around and refinance. The comparison rate of a fixed rate loan can be a good indicator of where your rate could go - a high comparison rate could indicate a high revert rate.

Pros of three-year fixed-rate home loans

  • Competitive interest rates: Some of the most competitive advertised interest rates are available on fixed-rate home loans, and three year loans seem to hit the ‘sweet spot’ between length of fixed period and a competitive interest rate.

  • Lots of choice: There is lots of competition in the three-year fixed space, with many lenders vying for your attention. This means if you don’t like the look of one product, it won’t be too hard to find another product that suits your needs.

  • Repayment certainty: Repayments are locked in for three years, which means they won’t go up as interest rates rise in the wider market. While you can pay extra - up to a certain limit - repayment certainty can make it easier to budget.

Cons of three-year fixed home loans

  • You’re locked-in: As the name implies, you’re locked in. That makes it harder to refinance if you find another more competitive product or one that better suits your needs.

  • Break fees: if you do decide to break out of a fixed-rate loan before the end of the fixed term (e.g. you need to sell your house), a lender will probably charge you a break fee, which can add up to thousands, depending on when you fixed, and how long into the loan you are.

  • Repayment restrictions: Fixed home loans usually have caps on the amount of extra repayments you can make in a year. Usually this is around $10,000, but check with your individual lender.

Three year fixed home loans can present a good opportunity to lock in a competitive interest rate and have repayment certainty, but look at your own personal circumstances to assess whether such a loan is right for you.

Photo by Ilyuza Mingazova on Unsplash

Ready, Set, Buy!

Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

By subscribing you agree to our privacy policy