Fixed rate home loans

Whether you’re looking to buy your first home, buy another one for your family, or refinance your current home loan to a better value one, Savings.com.au has compiled some of the lowest fixed home loan interest rates available on the market this month for both owner-occupiers and investors. We’ll be comparing some of the lowest fixed home loan rates available for:

Compare home loans with fixed-rates

Here is a snapshot of some of the lowest fixed home loan rates from a variety of lenders.

Fixed rate home loans FAQs

• Why should you choose a fixed home loan?
• Fixed vs variable home loans
• Is now a good time to fix your mortgage?
• Can you pay off a fixed rate home loan early?

Why a home loan fixed interest rate?

A fixed interest rate, as the name might suggest, fixes the interest rate you pay in place for the duration of the term specified. For example, a three-year fixed interest rate at 2.50% p.a. will stay at that 2.50% p.a. rate for three years regardless of economic pressures or the lender’s needs, before reverting to a standard variable rate. 

Cash flow certainty is arguably the biggest advantage of a fixed-rate loan. Your repayments staying the same for a known period of time can make it much easier to budget, as you know exactly how much your repayments will be. This often makes fixed-rate home loans popular for investors and first-time buyers over the first two-three years that they own a property for.

Of course, this can also be a disadvantage if interest rates drop. The locked nature of a fixed rate home loan means any reductions in a lender’s interest rates for any reason (such as recent changes to the cash rate) won’t be passed on to you, which can cause you to lose out on hundreds if not thousands of dollars. Also the variable rate the loan will revert to at the end of the fixed-rate period (known as the revert rate) can be significantly higher than some of the lower variable rates on offer, so you may want to consider refinancing to a different loan around this time. 

Fixed vs variable home loan rates

A variable rate home loan, on the other hand, is a home loan where your interest rate will move along with changes to the market. So if you have a home loan with a variable rate of 2.50% p.a. interest rate, and your lender decides to drop rates by 25 basis points, your home loan rate should now be 2.25% p.a.

Although variable rate home loans have a higher degree of uncertainty than fixed loans, they can be cheaper for you, particularly in times where rates are regularly falling. They also tend to have appealing features like the ability to make extra repayments, offset accounts and redraw facilities, which most fixed loans don’t allow. 

See our article on fixed vs variable rates to learn more about which one you should choose, and see what interest rates are currently to give you an idea of whether they might rise or fall. 

So is now a good time to fix your rate? 

This is a difficult question to answer, as choosing between a fixed or variable interest rate depends on your own situation as well as the broader economic environment. For example, it might be a bad idea to fix your interest rate if: 

• Interest rates are falling 
• You don’t want to be stuck with a particular lender (switching from a fixed-rate incurs high exit fees) 
• You like flexibility in a loan (many don’t allow extra repayments or extra features)
• You plan on quickly flipping the home within the fixed-rate period 

Mortgage Choice CEO Susan Mitchell told Savings.com.au that fewer borrowers now are fixing their interest rates due to recent Reserve Bank rate cuts in 2019, saying “our home loan approval data shows that demand for fixed-rate home loans has dropped since the RBA’s back to back cash rate cuts in June and July". 

But as of 2021, fixed-rate lending has seen an increase in popularity, with the majority of interest rate cuts from banks and lenders being for fixed loans. This is particularly true among the loans below the 2% per annum benchmark.  

If you want secure repayments and a basic, no-frills interest rate that’s also quite low for a short period of time, then a fixed loan could be the right option for you. 

“Fixed-rate home loans are a good idea if you want certainty for your home loan repayments because you might be dealing with budget constraints or foresee a change to your cash flow and you want more control over your finances,” Ms Mitchell said.

“I think we often fall into the trap of chasing the lowest interest rate and while it’s an important part of the decision when choosing a home loan, lender policy, loan structure and features should not be overlooked.

“For example, a borrower may benefit from a redraw facility or an offset account, features which come at a cost but could be beneficial to the borrower over time. It’s worth noting as well that not all borrowers will qualify for the lowest rate on the market.”

See more information in our ‘should you fix your interest rate‘ article. You can also consider a split home loan if you want to get the best of both types of interest rates.

Can you pay off a fixed rate home loan early?

If you repay your fixed rate home loan before the end of the fixed term, you will have to pay a break fee which may cost thousands. Other admin fees may also apply. If you want the freedom to repay your home loan early, a fixed rate home loan may not be the best option for you.

Savings.com.au’s two cents

Although they’re becoming less popular in a low-rate environment, fixed-rate home loans still represent a viable option for many home buyers. Just make sure you consider your financial situation before committing to a fixed-rate loan, as you don’t want to make the wrong choice.

If you are looking for a good low-rate fixed loan, then these home loans could be a good place to start. You can also keep up with the latest home loan rate movements by checking our home loan news page.

Looking for different fixed-rate products and lenders?

• 3 year fixed-rate home loans
• 5 year fixed-rate home loans
• 10 year fixed-rate home loans
• Investor fixed-rate home loans

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Refinance home loans.
Rates from 1.85% p.a. Compare