Police Bank, formerly NSW Police Credit Union, has taken the plunge with its fixed home loan rates, axing up to 1.15% to drop its three-year rates below the magic 5% mark.

It's been two-and-a-half years that the average new home loan rate has been below 5%, according to Reserve Bank of Australia data.

Police Bank is now offering 4.99% p.a. for three years across the range of its fixed home loan products for both owner occupiers and investors making principal and interest (P&I) repayments.

Its two-year fixed rates have also been slashed to 5.15% p.a.

Both rates are available to owner occupiers and investors with loan-to-value ratios (LVRs) up to 95%.

Here's a look at Police Bank's new rates for owner occupiers making P&I repayments:

Product % change New rate Comparison rate*

Police Value

P&I 0-60% LVR 2 years

 -0.34 5.15% p.a. 5.90% p.a.
P&I 0-60% LVR 3 years -0.60 4.99% p.a. 5.78% p.a.
P&I 60-90% LVR 2 years -0.34 5.15% p.a. 5.94% p.a.
P&I 60-90% LVR 3 years -0.60 4.99% p.a. 5.82% p.a.
P&I 90-95% LVR 2 years -0.34 5.15% p.a. 5.98% p.a.
P&I 90-95% LVR 3 years -0.60 4.99% p.a. 5.86% p.a.

Goldrate

P&I 0-60% LVR 2 years

 -0.34 5.15% p.a. 5.94% p.a.
P&I 0-60% LVR 3 years -0.60 4.99% p.a. 5.82% p.a.
P&I 60-80% LVR 2 years -0.34 5.15% p.a. 5.98% p.a.
P&I 60-80% LVR 3 years -0.60 4.99% p.a. 5.85% p.a.
P&I 90-95% LVR 2 years -0.34 5.15% p.a. 6.02% p.a.
P&I 80-95% LVR 3 years -0.80 4.99% p.a. 5.89% p.a.

Rates increase for those making interest only repayments.

Police Value loans are only available to current and retired employees of an Australian police force or police organisation, both uniformed or civilian.

Goldrate home loans are open to family and friends of a police employee or members of Police Bank. Anyone is eligible to become a member.

First home buyer rates also plunge

The new low fixed rates rates also apply to Police Bank's First Home products for eligible buyers qualifying for Housing Australia's First Home Buyer Guarantee or Regional First Home Buyer Guarantee with 80-95% LVR, as follows:

Product % change New rate Comparison rate*
First Home P&I 80-95% LVR 2 years -0.64 5.15% p.a. 5.58% p.a.
P&I 80-95% LVR 3 years -0.60 4.99% p.a. 5.50% p.a.

Check all this week's home loan rate movements.

Should I take out a fixed home loan?

As tempting as a home loan rate under 5% p.a. may seem, many new borrowers (more than 98% according to the latest data) are shunning fixed interest rate home loans, likely in anticipation of rates falling across the market.

The odds of this firmed this week with the all-important quarterly CPI data showing Australia's underlying inflation rate - at 2.9% - has dipped into the Reserve Bank of Australia's target range for the first time in more than three years.

Economists and commentators are now almost universal in forecasting the RBA monetary policy board will cut the cash rate by another 25 basis points to 3.85% when it meets on 19-20 May.

Many prominent economists are now confident Australia's cash rate will be 3.35% by the end of the year - perhaps making a fixed rate of 4.99% over three years less tempting.

But it's difficult to predict the movement of rates over a two or three year period, particularly in an environment of global uncertainty.

The decision on whether to fix an interest rate can also depend on a borrower's individual needs and circumstances.

See also: Should you fix your home loan interest rate?

In any case, fixed interest rates with a '4' in front may be more forthcoming by the end of 2025 although, of course, nothing is guaranteed.

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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
Filters
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsRow TagsFeaturesLinkComparePromoted ProductDisclosure
5.79% p.a.
5.83% p.a.
$2,931
Principal & Interest
Variable
$0
$530
90%
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 10% Min Deposit
  • Redraw
  • Extra Repayments
  • More details
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure
5.74% p.a.
5.65% p.a.
$2,915
Principal & Interest
Variable
$0
$0
80%
  • 100% owned by Commbank
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 20% Min Deposit
  • Redraw
  • More details
  • 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.
 Disclosure
5.84% p.a.
6.08% p.a.
$2,947
Principal & Interest
Variable
$250
$250
60%
  • 100% offset
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 40% Min Deposit
  • Offset
  • Redraw
  • More details
  • Easy application. Fast approval. 100% offset.
  • Unlimited additional repayments free of charge.
  • Redraw available - Access additional payments.
 Disclosure
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.

Important Information and Comparison Rate Warning

Image by Andrea Piacquadio via Pexels



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