Last Updated: 29th September, 2023

A five-year fixed-rate home loan provides a borrower with the security of an interest rate that remains the same for five years. This allows you to budget your payments over the term of the agreement and plan ahead without worrying about fluctuating rates. The five-year fixed-rate home loan falls right between the shortest and longest terms currently available for fixed rates in Australia – one year and 10 years. This makes it attractive to anyone looking for budget stability over a mid-term period.

Who Has The Cheapest 5-year Fixed Rate Home Loans?

For comparison purposes, the table below shows the lowest fixed interest rates and comparison rates currently available in the market:
Fixed Loan Term Interest Rate Comparison Rate* Contact Us
5 years fixed 5.79% 7.55% Apply Now
10 years fixed 7.49% 8.09% Apply Now
Unlike variable rates, fixed rates are changed by lenders almost weekly. So, it is important to keep yourself updated and shop around for the best deal. Many major lenders offer discount packages on their fixed-rate loans that can only be negotiated. For this reason, most people use a mortgage broker to help them find the lowest rate on their five-year fixed home loan.

Please call our mortgage brokers on 1300 889 743 or enquire online to find out which interest rate discounts you are eligible for.

Different Lenders Offer Different Rates

Unlike with variable rates where most major banks tend to match each other, fixed rate loans rates tend to vary between the banks. This is because fixed rates change every few weeks.

So, it is easier for the banks to get away with playing tricks with the pricing of their loans. Also, the economists working for each of the banks have different opinions as to the likely direction of interest rates in the future.

As a result, the major banks have large differences in their 5 year fixed rates.

When Should You Get A 5-Year Fixed-Rate Home Loan?

Choosing when to fix your rate and for how long isn’t an exact science. You can’t always accurately predict the future of interest rates, so you can only use an educated guess to work out if now is the right time for you to lock in your repayments.

You should fix for 5 years if you believe that rates are likely to be higher than they are now for the medium term. The other time that you should fix your loan is if there is a high likelihood that a spike in your repayments will push you over your limit.

Benefits of A 5-Year Fixed-Rate Period

Below are the major benefits of a five-year fixed period for your home loan:
  • Offers competitive rates compared with variable-rate and 10-year fixed-rate options
  • A more affordable initial cost than a 10-year fixed-rate period
  • Provides an extended period of protection from changing market conditions, compared with shorter fixed-rate periods
  • Helps in budgeting, as your repayment amounts will not change for five years.

When Is It Not A Good Time To Fix Your Interest Rate?

Try to avoid fixing your rate during times of economic volatility. The banks tend to increase their fixed rates in an attempt to cash in on fear. The best time to fix is during the ‘calm before the storm’, which of course is easy to see with hindsight, but nearly impossible to predict in reality. Fix when the market is stable, to protect yourself when the market is unstable. If the market is already unstable, fixing your rate should be considered as ‘damage control’.

When Is A 5-year Fixed Rate Home Loan Unsuitable For Me?

Of course, not everybody should fix their rate. A 5 year fixed rate would be unsuitable for you if:

  • Plan to make significant extra repayments on your loan.
  • Believe that you may sell your property.
  • Need a flexible loan such as a line of credit or 100% offset facility.

How Can I Apply For A Fixed-Rate Loan?

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