Low fixed home loan interest rates

While very few banks passed on the full cash rate cut to borrowers in August, in terms of variable home loan rates, CANSTAR has noted strong competition in fixed home loans.

Australia’s cash rate is at an historic low of 1.5% – and even though most banks didn’t pass the full cash rate cut on to borrowers in August, there are plenty of super-low home loans rates on offer – including in the fixed-rate space!

A lot of people focus on what banks do with their variable rate home loans when there’s a cash rate cut, but it’s also worth looking at what fixed rates are doing – and that has been very interesting this month because while most of the banks that passed on a variable rate cut passed on between 10 – 14 basis points,  quite a number of the banks that cut fixed rate loans cut by not just the full cash rate cut, but by more than twice that amount.

What that means is that there are now a large number of fixed-rate home loans at historically-low rates. At rates that we could only dream about in the past. You can now find advertised home loan rates of less than 4 percent right across all loan terms – right up to 5 years fixed.

CANSTAR’s Steve Mickenbecker discussed the current home loan competition with David Koch on Sunrise.

Home loan interest rates

Currently on CANSTAR’s database, the average and cheapest home loan interest rates that are available are:

Table: Residential Home Loan Market – Snapshot of the current market (05/09/2016)
Basic Variable Standard Variable Package Variable 1 Year Fixed 2 Year Fixed 3 Year Fixed 4 Year Fixed 5 Year Fixed
Average 4.31% 4.47% 4.28% 4.22% 4.06% 4.09% 4.46% 4.55%
Minimum 3.36% 3.35% 3.54% 3.65% 3.64% 3.59% 3.82% 3.94%
Source: www.canstar.com.au, the search results do not include all home loan providers, and may not include all features relevant to you. Based on a loan value of $300,000 and a borrower making principal and interest repayments

It’s not just a few institutions offering low home loan rates, either. For owner-occupiers paying principal and interest loans, there are on CANSTAR’s database, at time of writing and based on the advertised rate:

  • 132 variable loans at less than 4%
  • 107 2 year fixed loans at less than 4%
  • 107 3 year fixed loans at less than 4%
  • 10 5 year fixed loans at less than 4%

Whether there is a cut in the official cash rate or not in any given month, it is always worth comparing your home loan options to see whether you might be able to make some repayment savings.

Share this article