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Forecasting Fixed Rates

After getting approved for a home loan and finding a property, the next crucial decision you need to make is whether to go with a fixed or variable rate.

There are several advantages and disadvantages to fixing your home loan which you need to consider before deciding to fix.

In addition to these factors, it is not possible to accurately predict the future direction of interest rates. However, there are several indicators that can help you make an informed decision.

Wholesale bank rate updates

Rate type Mid price Weekly change Monthly change
90 days 2.1950 +0.1000 +0.0233
3 year 2.0700 +0.0900 +0.0200
5 year 2.4350 +0.1050 +0.0250

* While every attempt has been made to make this information accurate, this data may contain errors. You should independently verify the accuracy and comprehensiveness of this information before basing your financial decisions on the above data.

Fixed rate home loans

Below are the most competitive fixed rate loans currently on offer from our panel of lenders.

Fixed Loan Term Interest Rate Comparison Rate* Contact Us
1 year fixed 3.69% 4.87% Apply
3 years fixed 3.64% 4.23% Apply
5 years fixed 3.80% 4.41% Apply
10 years fixed 6.59% 6.17% Apply
15 years fixed % % Apply
Interest in advance 3.59% 4.32% Apply

*WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Each comparison rate is calculated based on $150,000 over 25 years for a secured loan.

How can BBSW data help you?

The 90-day bank bill swap interest rate (BBSW) is often referred to as the benchmark rate or reference rate for market interest rates.

Generally speaking, if 90 day bank bill rates move up or down then it is likely that banks may move their rates in the near future.

Similarly, 3 and 5 year interest swap rates are a good indicator for what the market expects interest rates to do over the next 3 to 5 years.

We have compiled the data for you so you can track BBSW rate changes on a daily basis.

Do not base your financial decisions on BBSW rate changes alone!

Seek expert advice from one of our mortgage brokers by calling 1300 889 743 or enquiring online.

Can a mortgage broker predict interest rates?

The short answer is no, but a good broker can provide guidance to you as a borrower.

Forecasting isn’t an exact science because it is based on current market knowledge and historical data.

Fixing is always at your own risk!

Please see our fixed rate home loan page for handy tips on knowing when to fix your loan.

Our expert brokers are also here to help you make an informed decision so please call us on 1300 889 743 or enquire online.

What is the money market?

The Australian money market is a part of the financial market in which highly liquid assets involved in short-term borrowing, lending, buying and selling are traded.

Some of these assets include bank bills, promissory notes, bank issued certificates of deposit and other short-term interest bearing securities.

What are bank bill swap rates?

A bank bill is a short-term money market asset that investors purchase at a discount to the face value, which will be earned at maturity.

Ultimately, the difference between what the investor pays for the bank bill and its actual face value at maturity is the investor’s return on investment (ROI).

The Bank Bill Swap Interest Rate (BBSW) is the benchmark rate for bank bills accepted by approved banks published daily by the Australian Financial Markets Association (AFMA).

By tracking 90 day, 3 year and 5 year bank bill rates you can start to get a good picture of the views of professional traders and, ultimately, how the entire market thinks.

Following these futures contracts provides a good indication of where interest rates are heading.

Is the inflation rate a good indicator?

When people talk about inflation they are really talking about the rate of increase in the prices of goods and services. If prices drop, inflation is on the rise.

So why is it talked about so often in the media?

It’s because the inflation rate is one of the most important indicators of interest rates.

The Reserve Bank of Australia (RBA) tries to keep the inflation rate at around 2-3%. Any rapid increase requires the RBA to increase the interest rates in an effort to slow spending.

On the flip side, if the Reserve Bank thinks inflation is slowing down, interest rates will be decreased.

The forerunner to the likely inflation rate is the Consumer Price Index (CPI), which is released by the Australian Bureau of Statistics (ABS) quarterly.

Basically, the CPI measures the change in the price of a basket of everyday goods and services including milk, bread and fuel.

If prices jump, it usually means inflation has jumped as well which means the RBA may increase interest rates.

What about the Australian dollar?

Generally speaking, a falling Australian dollar usually goes hand in hand with a rise in inflation, which causes interest rates.

However, the strength of the Aussie dollar compared to the US dollar is only one of a number of factors that affects inflation and, ultimately, interest rates.

The point is, don’t base your financial decisions on the media alone!

Talk to an expert

Does this all sound too confusing? Don’t worry, you’re not alone!

Call us on 1300 889 743 or enquire online and one of our specialist brokers can tell you whether a fixed rate is suitable in the current market environment and, most importantly, for your situation.

  • Moby

    When I get my home loan, I want to fix the rate for at least 1 to 3 years. It seems the comparison rate is more an entire percentage more for the 1 year fixed rate and close to it for 3. Can you explain what exactly this includes to make it that much more?

  • Hi Moby,

    Generally, the comparison rate is calculated by taking into account the interest rates, fees and charges, loan term, loan amount and the payment frequency. Since banks would rather want you to fix for longer periods, their comparison rates on shorter terms are more expensive. However, please note that comparison rates can’t be relied on completely and they don’t include some costs such as stamp duty and early repayments fees. You can read more here:
    https://www.homeloanexperts.com.au/interest-rates/comparison-rate/