What is a five-year fixed rate home loan?
A five-year fixed rate home loan locks in your interest rate for five years, meaning it won’t move regardless of whether the Reserve Bank of Australia (RBA) moves the cash rate or your lender adjusts its own home loan rates.
Once your five-year fixed term passes, your home loan will roll over or ‘revert’ to a variable rate, unless you decide to fix again, or refinance.
Most banks and lenders in Australia cap their fixed periods at one to five years, but a small number are willing to stretch that duration to 10.
Should I fix my home loan for five years?
There are several reasons why fixing your home loan for five years may be appealing. These include:
The long-term outlook for interest rates
It’s difficult to predict how rates could look five years into the future, but if rates are expected to rise, then locking in for five years could afford you some protection. That said, lenders may charge higher rates for longer terms to compensate for market uncertainty and future rate hikes. This is not always the case, though, and depending on the economic outlook, there may be times when shorter fixed terms are pricier.
Your own priorities and budget
If you want certainty and stability in your budget, then fixing your rate for five years can be appealing, because you’ll know exactly how your mortgage repayments will look for each week, fortnight or month. This can make it easier to plan the rest of your household budget, because you won’t get any surprises from sudden rate hikes over the five years of your fixed term.
Are there any drawbacks to fixing your rate for five years?
There are a handful of drawbacks you’ll need to keep in mind if you choose to fix your home loan, especially for a longer period like five years. These include:
- No benefit from rate cuts: Five years is a long time, and rates can move a lot in that period. If the RBA reduces the cash rate, lenders will typically reflect those cuts in their variable home loan rates. However, if rates do fall during your five-year fixed term, you won’t get to see the benefit, and you could be stuck paying more than the market average.
- Break fees: If you plan to exit your five-year fixed rate period early because you want to refinance, sell your home, discharge your loan (pay it off), or simply benefit from recent cash rate cuts, you could be charged a hefty break fee. The more time you have left in your fixed term, the costlier break fees could be, so any potential savings you make from switching to a cheaper rate could well be eaten up.
- Lack of flexibility and features: Unlike variable rate home loans, fixed rate home loans usually cap the maximum additional repayments you can make–some set annual caps and some will cap repayments across the entire fixed term. Likewise, fixed rate home loans typically do not offer access to features like offset accounts and redraw facilities, which can save you money in interest.
- The fixed rate cliff (also known as a mortgage cliff): If home loan rates rise substantially during your fixed term and your loan reverts to a variable rate after five years, you’ll suddenly find your mortgage is eating up a lot more of your budget. The shock of this is said to be akin to falling off a cliff.
How do you find the best five-year fixed rate home loan?
There’s no such thing as a ‘best’ five-year fixed rate home loan in Australia. The best product for you will depend on:
- Your risk tolerance: If you have a low tolerance for risk and want certainty in your budget, then a longer fixed term could give you peace of mind.
- Interest rate: Five years is a long time, and a small difference in interest rates can make a big difference to your hip pocket over the fixed term.
- Your preferred features: If you want to make additional repayments on your loan to knock the balance over more quickly, then it’s worthwhile seeking out a lender that allows this.
Having said that, Canstar’s Home Loan Awards recognise the lenders offering outstanding value to owner-occupiers and investors looking for fixed rate home loans.
Canstar’s 2026 Home Loan Awards: Winners of our Outstanding Value Awards for Fixed Home Lender: Australian Mutual Bank, BankVic, Greater Bank, Horizon Bank, Hume Bank, Pacific Mortgage Group, Unity Bank.
Canstar’s 2026 Home Loan Awards: Winners of our Outstanding Value Awards for Investment Fixed Home Lender: Australian Mutual Bank, BankVic, Greater Bank, Horizon Bank, Hume Bank, Newcastle Permanent, Pacific Mortgage Group, Summerland Bank.
Our Canstar 2026 Home Loans Awards page offers a full breakdown of our Home Loan Award winners, including winners in the variable, fixed and investment categories.
How do I compare five-year fixed rate home loans?
Comparing home loans is simple. At the top of the page, simply select your loan purpose and follow the instructions on-screen.
Based on your input, the rates table will present you with mortgage products that best suit your needs from our panel of lenders. If not, you can browse the default home loans with five-year fixed rates shown on the table above.
Be wary that a loan’s advertised interest rate does not account for standard upfront and ongoing fees. That’s why it’s important to check the comparison rate of any loan. This is a figure that factors in most of these fees as well as the interest rate, reflecting the ‘true’ cost of a loan, and lenders are legally required to display it alongside any advertised home loan interest rate.
A loan with a low advertised rate may be enticing, but its comparison rate can paint a different picture.
Can you switch to a five-year fixed rate without refinancing?
Yes, most lenders permit switching from a variable rate to a fixed rate without having to refinance. This is often referred to as a rate or product switch.
A rate switch could be as easy as switching through your lender’s app or web portal, or phoning their mortgage team. Do note that a rate switch isn’t guaranteed to be free, meaning you may incur a fee.
But before switching rates internally, it’s important to do some research to make sure you’re not missing out on a sharper rate from another lender. You can browse five-year fixed rates on our rates table at the top of the page to see what else is on offer.
In some cases, you may find that refinancing to another lender could secure you a more competitive interest rate than what your current lender is offering. Keep in mind that there are costs associated with external refinancing.
Your existing lender may also offer more competitive fixed rates to new customers. If these rates are lower than the ones offered to you, it’s worth calling your lender to request a rate-match.
What do you do when your five-year fixed rate ends?
Fix your rate again
If you enjoy the security a fixed rate gives you, you can negotiate with your lender to move onto a new fixed term for your preferred duration once your first five years expires.
Refinance to another lender
If your current lender’s rates aren’t looking crash hot, consider refinancing to another loan and lender with more appealing rates or features.
Some lenders even offer cashback to lure potential refinancers, but it’s best to verify if it's a good deal by checking its rates and features before making a decision.
Let your rate roll over
Once your five-year fixed term is over, your loan will roll over to your lender’s standard variable rate (this is also known as the revert rate). If rates rose during your fixed term, then your mortgage repayments will get more expensive, but if they fell, the revert rate could well be cheaper than the fixed rate you were on.
If your revert rate is looking higher than you’d like, you can explore the option of refinancing to avoid facing a steep mortgage cliff, saving you money.
