Fixed rates for home loans are well below variable rates and are the lowest they’ve been in Australian history.
Westpac was the first to launch a mega-low interest rate below 2%, after which the National Australia Bank (NAB) and Commonwealth Bank of Australia (CBA) followed.
The pressure now mounts on ANZ to do the same.
NAB cut its fixed rates to 1.89% p.a. down from 2.04% p.a. This move comes after Westpac cut its two-year fixed rate to 1.79% p.a.
In the case of CBA, it has dropped its two years fixed rate to 1.94% p.a. But increased its four years fixed rate to 2.19%.
Why are fixed rates so low?
Variable rate loans are not dropping at the same rate. Historically, if the fixed rates are below variable rates, it’s an indication that the money market is predicting interest rates to fall.
The cash rate is expected to remain at 0.1% for as long as necessary as the Reserve Bank of Australia (RBA) understands the impact of low interest rates on financial and macroeconomic stability.
Westpac, NAB and CBA cut fixed rates in an increasingly competitive market where all lenders are competing for the same owner-occupier customers.
However, Westpac’s 1.79% rate has a slight catch. Applicants qualify only if they are:
- opting for homes (and not investment property)
- borrowing 70% of the property price (deposit of 30%)
Lowest home loan rates from Big Four banks
| Fixed loan term | Westpac | NAB | CBA | ANZ |
|---|---|---|---|---|
| 2 years | 1.79% | 1.89% | 1.94% | 2.04% |
| 3 years | 1.88% | 1.98% | 2.14% | 2.04% |
Note: Westpac’s fixed rates are for a loan-to-value ratio (LVR) of 70% (as of March 22, 2021). ANZ is yet to make a move. However, if or when it does, we’ll update the above table.
If you have had a home loan for a while, now’s the perfect time to refinance and make the most of low interest rates environment.
Is fixing my interest rate a good idea?
| Pros | Cons |
|---|---|
| You have more certainty when you plan financially ahead and maintain a standard of living. | The fixed interest rate on your home loan does not change for a defined period. So, you might end up lamenting if rates drop yet further. |
| Fixing your mortgage at a lower rate means you can pay off your loan faster if you refinance and maintain the same repayment. | You might not be able to make large extra repayments. |
There are many pros to fixing your interest rate when they are cheaper than variable rates for a home loan.
However, it might not be ideal for everyone as there are cons to fixing your home loan interest rates.
Lenders might likely offer discounts or cashback to ward off competition, so it’s best to keep updated by talking to our award-winning mortgage brokers.
If you need help to determine if fixing your home loan is the right move for you, call us at 1300 889 743 or fill in our free online assessment form to discuss your options.