What is a two-year fixed rate home loan?
A two-year fixed rate home loan is one where the interest rate remains locked in or ‘fixed’ for a period of two years. This means you’ll have certainty your mortgage repayments will remain the same throughout the two-year period, regardless of movements of the cash rate.
Should I fix my home loan for two years?
Whether you’re a new homebuyer or refinancer switching from your current home loan to a new one, a two-year fixed rate can have some advantages, but you’ll need to be prepared for potential tradeoffs. Here’s some food for thought:
What are the pros and cons of two-year fixed rate home loans?
Potential pros of fixing your rate
- Certainty for your budget: Locking your rate in place means you’ll know exactly how your weekly, fortnightly, or monthly mortgage repayments will look for the next 24 months. Knowing exactly how your mortgage will look can make it easier to plan the rest of your household budget.
- Protection from rate rises: If interest rates surge, your rate will remain exactly where it is until your fixed rate term expires. This can make a real difference, especially if your mortgage is larger, as a small change in rates can make a big difference to your repayments.
Potential cons of fixing your rate
- No benefit from rate cuts: Fixed rates protect you from rate rises, but on the other hand, if interest rates drop, you won’t get to reap the benefits. You’ll need to remain on your fixed rate, unless you’re willing to pay to get out of it, the cost of which could eat up any potential savings.
- Break fees: If you do need to break out of your two-year fixed rate loan early, say because you’ve decided to refinance, sell your house, or you want to discharge the loan (pay it off), your lender could charge you a hefty break fee.
- Lack of flexibility and features: Fixed rate loans can be more restrictive than variable rates, and you generally won’t have the ability to make unlimited extra repayments. Likewise, fixed rate loans generally don’t offer features like offset accounts and redraw facilities, which can help you save on interest.
How do you find the best two-year fixed rate mortgage?
There’s no one-size-fits-all option for the ‘best’ two-year fixed rate home loan in Australia. That said, 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.
You can see a more detailed breakdown of our Home Loan Award winners, as well as the winners of the variable, fixed and investment categories, by visiting Canstar’s 2026 Home Loan Awards.
How do I compare two-year fixed rate home loans?
Comparing home loans is simple with Canstar. Just scroll to the top of this page, select your loan purpose, and follow the prompts. We’ll present a selection of mortgage products that might fit your needs. Alternatively, you can browse home loans with two-year fixed rates on the table above.
When comparing home loans, don’t just look at the advertised interest rate, be sure to check the comparison rate too. Lenders are legally required to display the comparison rate alongside any interest rate they advertise. It factors in most standard upfront and ongoing fees, to give you a truer picture of the loan’s actual cost.
A two-year fixed rate home loan with a low advertised interest rate might seem appealing, but the comparison rate could tell a different story.
Can you switch to a two-year fixed rate without refinancing?
Yes, most lenders in Australia will allow you to switch from a variable rate to a fixed rate without going through a lengthy refinancing process. This is often referred to as a rate switch or a product switch. You can generally do this through your bank’s app or online portal, or by speaking directly to your lender’s mortgage team over the phone. Though, you might be charged a fee for doing so.
If you’re thinking about locking in a two-year fixed rate with your current lender, it pays to compare first to make sure you’re getting a good deal. You can browse two-year fixed rates on the tables above to get an idea of what’s on the market right now. You might find that refinancing to another lender could land you a far better rate than your current lender can promise.
It’s also worthwhile to check your current lender’s website to see what rates it offers to new customers. If the advertised rate for new customers is lower than the rate on offer for you, then it’s worthwhile calling your lender to ask if they can match it.
What do you do when your two-year fixed rate ends?
Two years can go by in a snap and the end of a fixed rate period can creep up on you! When your two-year term comes to an end, you’ll generally have to choose one of three options:
- Let your rate roll over: When your fixed term ends, your loan will roll over or ‘revert’ to your lender’s standard variable rate. This may be the path of least resistance, but can be costly, especially if the variable rate is more than what you’re currently paying.
- Fix your rate again: If you like the certainty of a fixed rate, you can negotiate with your lender to move onto another fixed term. It doesn’t have to be for two years, either–you can normally fix a loan for between one and five years.
- Refinance to another lender: If your current lender’s not cutting the mustard, you can refinance your loan to another with a sharper rate or a better deal on offer. Some lenders even offer cashback to tempt refinancers, but make sure you check the rate and features of the loan to make sure it's a good deal for you.
What is the fixed-rate cliff?
The fixed-rate cliff (or ‘mortgage cliff’) is the sudden, dramatic jump in home loan repayments that can happen when your fixed term comes to an end and your loan switches to a variable rate.
Say you fixed your rate two years ago and, in the meantime, the Reserve Bank of Australia (RBA) has raised the cash rate multiple times, with banks and lenders raising their own home loan rates in turn. When your fixed rate period ends at the end of 24 months, your loan may revert to a variable rate that’s much higher than your current one.
The effect of a sharp rate increase overnight is said to be akin to the shock of falling off a cliff.
