A week after CBA’s Bankwest announced it was closing all of its 45 branches, the soon-to-be digital-only bank came up with a sweetener – an across the board cut in its fixed rate home loans by up to 40 basis points.

It joins National Australia Bank’s digital-only Ubank and a handful of other lenders slashing fixed rates this week.

But it’s hardly an original idea – fixed rates have been on the downhill slide for the past few months, likely in anticipation of a fall in the Reserve Bank cash rate widely forecast for later this year.

Yet while fixed rates have been tumbling, it seems very few borrowers are locking in.

Fixed rate home loan popularity plummeting

The latest ABS data shows just over 2% of new home loans, by value, were fixed in January, compared to around 40% two years earlier.

Borrowers flocked to fixed rates when interest rates fell below 2% but the number of fixed rate borrowers peaked in 2021 and has been declining ever since.

January was the first month the total value of fixed rate loans came in below $1 billion since well before the pandemic.

But that hasn’t stopped lenders trying to entice home buyers with lower fixed rates. Let’s check the home loan rate changes this week.

Bankwest’s good news story

The Western Australian institution, acquired by CommBank in 2008, has taken the slasher to its fixed rates this week for owner occupier, investor, principal and interest (P&I), and interest only (IO) home loans.

Bankwest's headline Complete Fixed Home Loan Package, offering multiple offset accounts, for loan-to-value ratio (LVR) ≤80% with P&I repayments dropped 30 basis points to 6.29% p.a. (7.16% p.a. comparison rate*), fixed for three years.

Bankwest’s standard Fixed Rate Home Loan LVR ≤80% has also dropped 30 basis points to 6.49% p.a. (8.31% comparison rate*), fixed for three years, for P&I loans.

The larger 40 basis point drops were seen across a range of two-year fixed interest terms on owner occupier and investor loans.

Ubank u-turns on fixed rates, lifts variable

Australia’s first digital-only bank, owned by NAB, has dropped interest rates between 35 and 65 basis points on a wide range of P&I and IO loans fixed between one and five years.  

Ubank’s Flex Fixed P&I rate for one year for loans with LVR ≤60-80% is now 6.39% p.a. (6.45% p.a. comparison rate*), a drop of 35 basis points, for owner occupiers.

The bank’s biggest cut – 65 basis points – sees its Flex Fixed P&I owner occupier loans with an LVR ≤60-80% fixed for three years dip under the 6% benchmark, at 5.99% p.a. (6.37% p.a. comparison rate*).

Its fixed rate investor loans are also down across the board, with its Investment Flex Fixed P&I loans of ≤60%-80% LVR fixed for two and three years dropping 49 basis points.

The new rate is 6.29% p.a. (6.61% p.a. comparison rate* ≤60% LVR two years; 6.6% p.a. comparison rate* ≤60% LVR three years; 6.65% p.a. comparison rate* 70-80% LVR two years; 6.63% p.a. comparison rate* 70-80% LVR three years).

But for every action, there is often a reaction; Ubank has also lifted a raft of variable rates on investment home loans by 10 basis points.

Bank Australia drops variable rates

One of Australia’s largest mutual banks, Bank Australia has cut its variable rates by up to 11 basis points this week.

Its best rates are on its Clean Energy Eco Plus variable P&I loans LVR ≤90% which are down six basis points.

The loans are targeted at eligible customers looking to build energy-efficient homes or upgrade the green credentials of their existing homes.

The Clean Energy Eco Plus Home Loan – marketed for “ambitious homes” - now has a 5.88% p.a. variable rate (6.38% p.a. comparison rate*) while the Eco Upgrade variable rate is 5.98% p.a. (6.42% p.a. comparison rate*).

Bank Australia’s Basic Home Loan for LVR 70-80% is now 6.14% p.a. (6.19% comparison rate*), down three basis points.

Bank of us cuts variable and fixed mortages

Tasmania’s only customer-owned bank, Bank of us, is another bank dropping its fixed home loan rates between five and 50 basis points.

Owner occupiers can now lock in a rate of 5.99% p.a. (6.14% p.a. comparison rate*) fixed for two years for LVR ≤80% with a FlexiDiscount Home Loan – a significant drop of 50 basis points.

Locking in for three years fetches a rate of 5.94% p.a. (6.11% p.a. comparison rate*), a cut of 35 basis points.

Bank of us’s best new rate on its Fixed Investment loans is its FlexiChoice LVR 80% product, fixed for three years, at 6.29% p.a. (6.48% p.a. comparison rate*).

Another fixed rate under 6%

Northern Inland Credit Union has slipped under the 6% mark for its Dream Home Loan owner occupier and investor loans fixed for three years, now both at 5.99% p.a. (6.61% p.a. comparison rate*) for LVR ≤90%.

Regional Australia Bank, Reduce do not reduce variable rates

Regional Australia Bank, the old University of New England staff credit union, is also heading north with its variable rates this week, raising the rates on a range of its mortgage offset products by nine basis points.

However, rates on its fixed P&I and IO home loan products continue to plunge, some being discounted by as much as 55 basis points.

Finally, Reduce Home Loans has lifted rates by five basis points on its perhaps not-quite-appropriately named Investor Rate Slasher IO and P&I Special Offer variable loans this week.


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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
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
90%
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5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
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  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.09% p.a.
6.11% p.a.
$2,421
Principal & Interest
Variable
$0
$250
60%
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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.

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