The popularity of fixed-rate home loans took off during the pandemic, peaking at nearly half of all new mortgages written in mid-2021. However with the first Reserve Bank cash rate rise in more than a decade, many lenders have moved fixed rates sharply north - particularly ones fixed for three years or more.

Luckily there are a few deals to be found for home loans fixed for shorter periods - in this instance, two years.

2 Year Fixed-rate Home Loans

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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
5.85% p.a.
5.93% p.a.
$2,360
Principal & Interest
Fixed
$0
$0
90%
5.94% p.a.
7.92% p.a.
$2,383
Principal & Interest
Fixed
$0
$800
70%
5.99% p.a.
7.76% p.a.
$2,396
Principal & Interest
Fixed
$395
$0
80%
6.19% p.a.
6.17% p.a.
$2,447
Principal & Interest
Fixed
$0
$798
80%
5.99% p.a.
6.13% p.a.
$2,396
Principal & Interest
Fixed
$0
$840
90%
  • Immediate cashback upon settlement
  • $2,000 for loans up to $700,000
  • $4,000 for loans over $700,000

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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.

Pros and cons of a two-year fixed home loan

There are a few things you’ll have to consider before pulling the trigger on a mortgage fixed for two years.

Pros

  • Repayment certainty: Repayments won’t fall or rise during the time of your fixed period, giving you repayment certainty.

  • Find your feet: The stability of a fixed rate home loan, if you’re a first home buyer, allows you to get used to paying off the mortgage without worrying about the repayment changing.

  • Lock-in before rates rise: Locking-in a rate for a couple of years can mean you weather any rate rises in that time. But the same goes for rate decreases too - you won’t get the chocolates.

  • Consider a split: Split home loans keep some of the loan variable, and some of it fixed. This gives you flexibility and some repayment certainty.

Cons

  • Higher interest rates: Fixed mortgage rates are typically moving upwards at a faster rate and are more expensive than variable products.

  • Break costs: If you leave a fixed rate home loan early, you’ll probably face break fees. These are usually a calculation based on the difference between the bank’s wholesale funding rate, your mortgage rate and how long you have left on the loan. This could add up to thousands of dollars.

  • Repayment restrictions: Lenders typically restrict extra repayments to $10,000 per year on fixed home loans, and there are usually penalties if you go over this cap.

  • Light on features: As a consequence of repayment restrictions, fixed loans might not feature an offset or redraw account.



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