What is a fixed rate home loan?
A fixed rate home loan has an interest rate that’s locked in (or fixed) for a set period of time. During this time, your interest rate won’t change and your repayments will remain relatively the same. This can give you certainty around how much your repayments will cost you and may help you when budgeting.
What happens at the end of your fixed home loan term?
At the end of your fixed rate period, your loan will usually transition to a ‘revert’ rate. A revert rate is often your lender’s standard variable rate, which will typically be higher than other variable rates it offers.
From here you can choose to lock in another fixed rate period - keeping in mind rates may have changed, negotiate a different variable rate, or consider a split rate home loan.
If you find a better deal elsewhere, you could also consider refinancing to a new lender. There may be costs involved for doing so, like loan discharge fees from your current lender and loan application fees from your new one.
How long can you fix a home loan rate for?
Most lenders offer fixed rate home loans with terms between one and five years. Longer terms are quite rare and usually determined on a borrower-by-borrower basis.
What are the best fixed rate home loans?
While there’s no one ‘best’ fixed rate home loan, you can find the best one for you by thinking about your needs and budget.
If you’re comparing fixed rate home loans, Canstar’s Home Loan Awards recognise the financial institutions offering outstanding value to borrowers. Our most recent award winners were:
2026 Outstanding Value Award - Home Lender: Australian Mutual Bank, BankVic, Hume Bank, Pacific Mortgage Group, People’s Choice (now part of People’s First Bank), Unity Bank, and Up.
2026 Outstanding Value Award - Fixed Home Lender: Australian Mutual Bank, BankVic, Greater Bank, Hume Bank, and Unity Bank.
How to find the best fixed rate home loans
When searching for the best fixed rate home loan using the comparison table above, you should consider a loan’s:
- Interest rate, which determines how much interest you pay each repayment, expressed as a percentage per year. Fixed interest rates are set for the period of time you choose.
- Comparison rate, which takes into account both the interest rate and certain upfront and ongoing fees. This can give you a better idea of the true cost of a loan each year.
- The loan’s required loan-to-value ratio (LVR), which is the amount you need to borrow compared to the value of the property you’re buying or refinancing.
- Fees like loan application and establishment, valuation, legal, settlement, and ongoing fees.
- Features that may help you manage your money and mortgage more smoothly.
- Whether the provider is an Award Winner, as Award-winning loan products have been reviewed and rated by our expert researchers and found to offer customers outstanding value on both price and features.
What are the lowest fixed rate home loans?
You can find some of the lowest fixed rate home loans from our online partners by using the comparison table above.
Just because a loan has the lowest rate doesn’t necessarily mean it's the cheapest. That’s why it’s important to take into account both the interest and comparison rate when comparing fixed rate home loans. Some of the lowest fixed rates are also usually reserved for borrowers with lower LVRs.
What features do fixed rate home loans come with?
Fixed rate home loans typically have fewer features than variable rate ones, meaning you may not be able to benefit from offset accounts, redraw facilities, or have the ability to make unlimited additional repayments.
Some lenders do offer a rate lock on fixed rate home loans, which allows you to ‘lock in’ a fixed rate before your loan settlement, generally for up to 90 days. This can protect you from potential rate rises in the time between applying for the home loan and your loan settling.
Say, for example, you apply for a home loan with a fixed interest rate of 6% p.a., but by the time your purchase of your new property settles, the fixed rate could have risen to 6.25% p.a.
If you’d locked in your rate, you’d be guaranteed the 6% rate, even if your lender’s rates have gone up.
How much does a rate lock cost?
Some lenders charge a flat fee for a rate lock, while others will charge a percentage of the loan amount. To give you an idea, at the time of writing, here’s what the big four banks charge:
- ANZ: $750 per $1 million in lending
- CommBank: $750
- NAB: 0.15% of loan amount
- Westpac: 0.10% of loan amount
Are there downsides to locking in a rate?
There are some potential drawbacks to be wary of, so it’s important to consider the fact that:
- Rate lock fees tend to be non-refundable.
- If rates stay the same or go down during the rate lock period, or if your lender does not approve your application, you’ll still pay the fee.
- If you change your mind during a rate lock period, and find a more favourable rate you want to switch to, you’ll be charged another fee for locking that rate in.
Make sure you look at what features are available on the specific fixed rate home loan you’re considering before you apply.
What happens when you refinance your fixed rate home loan?
If you refinance a fixed rate home loan during the fixed term, you may need to pay break fees. The cost of break fees are usually based on how much is still owing on the loan, the time remaining on the fixed period, and how much variable interest rates have changed since you first took out the loan. If rates are lower than they were when you fixed, you’ll likely face higher break costs, and vice versa.
There may be regular refinancing costs to keep in mind as well, like discharge and loan establishment fees.
What are the pros and cons of a fixed rate home loan?
Pros
- Certainty: Your repayments will stay relatively the same during your fixed period. This could make budgeting easier.
- Protected against future rate rises: If your lender decides to increase its rates, your repayments will not be affected.
Cons
- You may miss out on lower rates: If your lender decreases its rates, you won’t benefit and may miss out on a lower rate.
- Less flexible: For example, there may be restrictions on making additional repayments and you may be charged a break fee if you decide to change your loan during the fixed term.
- Less features: Fixed rate home loans generally lack features that typically come with variable rate ones. For example, you may not be able to access an offset account or a redraw facility.
Why apply for a fixed rate home loan?
If you’re someone who values certainty, you might find a fixed rate home loan beneficial. Since your repayments stay relatively the same, it’s usually easier to budget for this kind of loan as well.
When should you choose a fixed rate home loan?
There are a few different situations in which you may choose a fixed rate home loan over a variable rate one:
- Fixed rates are low: If rates are particularly low (and you don’t expect them to get lower), fixing could be a good idea.
- You value certainty: Fixed rate home loans are generally easier to budget for, as your repayments will stay relatively the same throughout your fixed term.
- You want to manage cash flow: If you’re an investor, you may find a fixed rate helps you forecast your cash flow and plan your finances. This can be particularly helpful if you have investment properties generating rental income.
How long should you fix your home loan rate for?
This will depend on your financial situation and preferences, as well as the current and forecasted interest rate environment. For example, if rates are likely to increase in the long term, fixing at a lower rate for an extended period of time may be beneficial. On the other hand, if rates are poised to drop, you may only want to fix for a shorter period of time, say one year, in order to cash in on predicted rate cuts. Of course, it’s worth noting that rate changes aren’t guaranteed.
Who decides when fixed interest rates go up or down?
Your lender decides whether to put rates up or down, guided by both its own operating costs and the cash rate set by the Reserve Bank of Australia (RBA). The cash rate, in large part, determines banks’ operating costs, as it represents how much they need to pay to borrow on the overnight money market (which many need to do in order to meet their liquidity requirements).
Your lender is not required to set rates based on the cash rate, however it will generally follow the RBA closely. If the RBA puts the cash rate up, your lender will typically pass its additional costs onto you in the form of increased rates, whereas if the cash rate drops, lenders will generally cut rates to stay competitive.
Even when the cash rate is held steady, rates can change due to other factors.
Who’s eligible for a fixed rate home loan?
Eligibility for a fixed rate home loan should be much the same as any other type of owner-occupier home loan. Generally, you’ll need to:
- Be over 18 years of age
- Be an Australian citizen or permanent resident (or be applying with one)
- Meet your chosen lender’s lending criteria, like having an eligible source of income
- Have a deposit or equity of at least 5% of a property’s value
- Have a positive credit history and a good credit score
