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Have Rates On Fixed Home Loans Changed?

What are the rates on fixed home loans at the moment? Have they changed? And how many people are using them? Canstar finds out.

Yet again this month there was no movement in the official cash rate – this is the 12th month in a row the Reserve Bank has kept rates at historically low levels.

Home loan interest rates however have still been on move, although the movements have been relatively small. But what exactly are the rates on fixed home loans compared to variable home loans?

Using Canstar’s own research, we will answer these questions while also examining the popularity of each type of home loan.

See our comparison table below sorted our star rating (Highest – Lowest), which features a snapshot of 5 star rated products with 80% LVR Fixed loans for first home buyer with direct links to the providers website. Please note that this table is formulated based on a loan amount of $550,000 taken out in NSW, repaying both principal and interest.

Current fixed home loan rates

The tables below show the minimum, maximum and average interest rates on Canstar’s database for fixed rate home loans at the time of writing. Note these tables only take into account those fixed rate home loans available for $350,000 with principal and interest repayments.

Residential P&I Home Loan Market – Snapshot (4/09/2017)
  1 Year Fixed 2 Year Fixed 3 Year Fixed 4 Year Fixed 5 Year Fixed
Average 4.08% 4.05% 4.10% 4.46% 4.53%
Min 3.49% 3.64% 3.69% 3.99% 3.99%
Max 5.04% 4.74% 4.84% 4.99% 5.14%

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 residential loans available for $350,000, 80% LVR and principal & interest repayments.

Investment P&I Home Loan Market – Snapshot (4/09/2017)
  1 Year Fixed 2 Year Fixed 3 Year Fixed 4 Year Fixed 5 Year Fixed
Average 4.41% 4.37% 4.45% 4.76% 4.82%
Min 3.94% 3.85% 3.99% 4.42% 4.39%
Max 5.49% 5.69% 5.89% 5.19% 6.19%

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 investment loans available for $350,000, 80% LVR and principal & interest repayments.

Have fixed rates changed?

To see if there’s been any changes in fixed rate home loans over the past 12 months, Canstar has dug up some historical data from September 2016 to the present that shows the average rates on the different fixed home loan terms.

Fixed Home Loan Rates
2016 2017 Change (2016 vs 2017)
1-year fixed home loan 4.17% 4.11% -0.06%
2-year fixed home loan 4.01% 4.06 0.05%
3-year fixed home loan 4.04% 4.14% 0.10%
5-year fixed home loan 4.50% 4.56% 0.06%
Source: www.canstar.com.au. Based on products listed on Canstar database. Assumes $350,000 loan at 80% LVR with Principal and Interest repayments for owner-occupiers. As at 01/09/2016 and 01/09/2017. Please note these are advertised rates – please check the relevant comparison rate of any specific loan products. Read the Comparison Rate Warning.

You can see here that despite individual lenders moving their rates up and down in competition, rates on average have remained relatively steady year-on-year, albeit some slight adjustments.

With the exception of 1-year loans, interest rates have risen for 2, 3 and 5-year fixed products, although not by very much. 3-year fixed home loans saw the biggest rise by just 1/10 of a percent, whereas 1-year fixed home loans decreased by a mere 0.06%.

Variable Home Loan Rates
2016 2017 Change (2016 vs 2017)
Basic Variable 4.22% 4.26% 0.04%
Standard Variable 4.60% 4.62% 0.02%
Package Variable 4.18% 4.18% 0.00%
Source: www.canstar.com.au. Based on products listed on Canstar database. Assumes $350,000 loan at 80% LVR with Principal and Interest repayments for owner-occupiers. As at 01/09/2016 and 01/09/2017. Please note these are advertised rates – please check the relevant comparison rate of any specific loan products. Read the Comparison Rate Warning.

Variable rates have stayed relatively flat since 2016 – the largest increase was just 0.04% for basic variable loans. While there is less movement, you can see that the average rates on variable home loans are a fair bit higher than fixed home loans, particularly for shorter terms.

There are other factors to consider beyond interest rates, however – variable home loans can give you a larger degree of flexibility in your loan contract while also capitalising on any rate changes.

In November 2016 – just after the last rate cut – AMP Chief Economist Shane Oliver told Fairfax Media Australia had likely seen the bottom of the interest rate cycle, and that “there is a case to lock in fixed rate mortgages when their rates remain ultra-low below 4%.”

So, have Aussie home buyers been fixing their loans?

Compare Home Loans with Canstar

Fixed vs variable home loans – which is more popular?

More than 200,000 people have used Canstar’s comparison tables to search for home loans since September 2016’s Fixed Rate Award. And using data from visitors to the Canstar website, we can see that fixed rate home loans remain a popular option for those in the property market.

The following table illustrates the type of loan (fixed or variable) that consumers have been looking for over the last 12 months when they come to Canstar’s website, with a breakdown by term:

Fixed rate term included in search filters Percentage of visitors
1-year fixed rate 12.81%
2-year fixed rate 14.99%
3-year fixed rate 25.07%
5-year fixed rate 15.26%
Variable 31.88%

Using these figures, the total percentage of Canstar users searching for fixed home loans in 2017 is 68%. Given the large sample size, this is a pretty good indication of what Australian home owners are looking for.

If you’re one of those people, then you look at what’s available in terms of fixed rate home loans on the Canstar site:

Compare Home Loans with Canstar

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