Does my bank have the cheapest 3 year fixed rate?

Did you know that the four major banks vary significantly in the pricing of their 3 year fixed rates?

Unlike variable rates, fixed rates are chopped and changed by the banks on an almost weekly basis. This allows the banks to play all sorts of games with their interest rates without many people noticing.

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers will contact you to discuss your options.


Not all lenders are equal

Lenders try to price their 3 year fixed rates so that they will make money over the term of your loan. That means that they have to estimate the likely future rate increases or rate cuts. The great news is that every lender has a different opinion!

The end result is that one bank may offer reduced fixed rates because they believe rates will fall while another may have higher rates expecting rates in be higher of the next 3 years.

The end result is that shopping around for your 3 year fixed rate home loan will save you plenty of money!


Who wins? The bank or me?

When you fix your interest rate you are in effect betting against the bank. The bank is estimating rates to take one direction and you are accepting their prediction and locking the rate in usually to protect yourself from the Reserve Bank increasing the cash rate.

You need to really look out for fixing your rate for a longer term at times of market hysteria! Banks tend to increase their fixed rates rapidly at the first sign of bad economic news. They are trying to make more money off of the market panic.

So the best time to fix is actually when the market is steady, as 3 year rates tend to be lower.


What happens after the fixed rate period?

After 3 years your fixed rate will expire and your loan will revert to the prevailing variable interest rate. Generally, the bank will mail you a letter a month before the expiry of your fixed rate and offer you the chance to re-lock your rate in for another 3 years.

This is a good time to contact your mortgage broker to make sure that the rate you are being offered is competitive.

If you don’t re-fix the rate then the bank will usually put you on the Bank Standard Variable rate (BSV) and hope that you don’t notice!

Talk to your mortgage broker and they will negotiate with the lender on your behalf to make sure that they give you a discount below the BSV.


Is a 3 year term suitable for me?

3 years is usually the shortest amount of time that we recommend our customers to fix a loan for. 2 or 1 year fixed rates have very little benefit because of the short term.

Most people that have a 3 year fixed rate have chosen 3 years over other terms because of expected short term volatility in the financial markets.


How do I apply for a 3 year fixed rate loan?

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers will contact you to discuss your options.

  • Wahlberg

    This page is quite informative but I’m not entirely sure if I should fix my rate. I’m just a bit concerned when it comes to exit fees, in case anything happens and the contract needs to be broken…

  • Hey Wahlberg,

    Thanks for your comment. Three year fixed rates were the first to drop due to the recent RBA rate cut and since we don’t know if they will drop further or go up, it is a good time to fix. However, it does depend on your objective so you can call us on 1300 889 743 and discuss it with one of our expert mortgage brokers or have a read of our Should I Fix page:
    https://www.homeloanexperts.com.au/fixed-rate-loans/should-i-fix-my-home-loan/

  • Malik

    Hi, I’m currently on year 3 on a 5-year fixed rate and I’m thinking of refinancing to another lender that has a great deal on offer. Nothing confirmed yet though but I’d like to find out how much I may have to pay in break fees. Any simply method for this?

  • Hi Malik, you can simply have a crack at the break costs calculator to find out how much you may have to pay in break fees. Here’s the link to it:
    https://www.homeloanexperts.com.au/fixed-rate-loans/break-costs-exit-fees/

  • Wyatt

    Fixed rate loans have restrictions, yes but what type of restrictions exactly? Like having to pay break fees if I break the contract is fine but what other rules can I expect?

  • Hi Wyatt,

    Fixed rate loans do have restrictions and paying break fees is one of them. Here are some other restrictions:
    – Your extra repayments are usually limited to no more than $10k p.a. before penalties apply.
    – You may not be allowed to link an offset account.
    – You may not be allowed to redraw any additional payments that you may have made.

  • Riley

    Please give me some tips to help me improve my credit score for a better home loan deal.

  • Don’t worry Riley, if you take the right steps then you can actually increase your credit score. However, do note that there are also some Australian lenders that do not use credit scoring to assess mortgage applications. Please check out this page to learn more about all this:
    https://www.homeloanexperts.com.au/credit-score-home-loan/improve-my-credit-score/

  • D Smith

    I’d like to check my credit score first so can you please look it up or something and reply back? Where shall I send in my details?

  • Hey D Smith,
    You can simply input your details into the credit score calculator, which uses a similar method to that used by the banks and lenders mortgage insurers to assess loans. Whilst all lenders view risk differently, you’ll find that the calculator is an excellent guide that can help you understand why a banks may potentially decline your loan. Here’s the link to the calculator:
    https://www.homeloanexperts.com.au/credit-score-home-loan/credit-score-calculator/