Fixing a home loan: We get it right half the time

26 September 2016
Canstar releases research of 394 fixed rate home loans from 90 institutions to announce the Bank of the Year – Fixed Rate Award, Customer Owned Institution of the Year – Fixed Rate Award, Non-Bank Lender of the Year – Fixed Rate Award

While variable rate home loans are still popular, Canstar’s analysis of more than 200,000 home loan product searches on its database has found that interest in fixed-rate home loans has increased as the official cash rate has fallen.

“A variable rate home loan is still the single most popular type of home loan visitors to Canstar’s database look for, at approximately 66% of searches, but the popularity of fixed loans is increasing as the cash rate falls,” said Canstar Editor in Chief, Justine Davies.

“In terms of fixed rate loans, three years seems to be the sweet spot, but with a number of borrowers also seemingly prepared to lock in for a five year term.”

So is fixing a good idea?
Canstar’s analysts have crunched the numbers on 3-year fixed rate home loans taken out and now matured to determine how often, over the past twenty one years, home buyers were better off on average by choosing a 3 year fixed rate compared to a standard variable rate home loan. The result:Retrospective look at 3 years fixed home loan

Since August 1992 there have been

  • 126 months when it was financially beneficial to have fixed your loan for a 3 year term
  • 128 months it was financially beneficial to have chosen a variable loan

In other words, it’s basically a 50/50 chance.

The analysis is based on the average interest rates of the Big 4 banks and a $300,000 home loan paying interest only.

“Considering the amount of economic expertise available within the banks, I think it’s impressive that buyers have been able to beat them at their own game half the time,” observed Ms Davies.

Who offers outstanding value?

Canstar has analysed 394 fixed rate home loans from 90 financial institutions to determine which bank, non-bank and customer-owned institution are offering outstanding value, with the winners as follows:

Bank of the Year Fixed Rate Award 2016 Canstar Bank of the Year - Fixed Home Loan ME
Customer Owned Institution of the Year Fixed Rate Award  2016 Canstar Customer Owned Institution of the Year - Fixed Home Loan Catalyst Money & Illawarra Credit Union
Non-Bank Lender Fixed Rate Award  2016 Canstar Non-Bank of the Year - Fixed Home Loan AMO Group

“There is exceptionally strong competition in the fixed-rate home loan market at the moment and these insitutions have all done phenomenal work to win these very strongy-contested awards,” said Ms Davies.

“We look not only for highly-competitive interst rates, but also for great loan features as well as exceptional price and value across the customer spectrum, from first home buyers through to refinancers and investors. Canstar congratulates ME, Catalyst Money, Illawarra Credit Union and AMO Group for leading the way in offering outstanding fixed rate home loan value to their customers.”

For further information:

Justine Davies

Editor in Chief

Ph. (07) 3837 4151  |  0400 127 733

About Canstar

Canstar provides Australia’s interactive online research service in consumer and business finance. Founded in 1992, Canstar Pty Limited is Australia’s researcher of retail finance information for over 250 institutions such as Banks, Building Societies, Credit Unions, Finance Companies, Brokers, Mortgage Originators, Life Companies and finance related Internet Portals. Canstar customers use the extensive database for competitor analysis as well as a means of disseminating their product range. Canstar also distributes this information to print and electronic media for publication and to Agents, Accountants, Brokers and Internet Portals for use in advising their clients.

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Canstar researches, compares and rates the suite of banking and insurance products listed below. Results are freely available to consumers who use the star ratings as a guide to product excellence. The use of similar star ratings logos also builds consumer recognition of quality products across all categories. Please access the Canstar website at if you would like to view the latest star ratings reports of interest.

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