Cheapest fixed and variable offerings: mortgage brokers record spike in fixed-rate home loan enquiries
Two out of every five (40%) home loan enquiries to mortgage brokers Loan Market are now for a fixed-rate home loan product.
This follows the RBA cutting the cash rate to 2.75% on May 7 and lenders responding with fixed-rate cuts to interest rates below 5% including Aussie Home Loans, RAMS, Westpac, St.George, Bank of Melbourne and BankSA.
Loan Market spokesperson Paul Smith says that since the RBA rate cut, 40% of home owners have been looking into fixing their interest rate, which is the highest proportion since the start of 2013.
“There’s been a roller coaster of speculation when we’ll hit the bottom of the interest rate cycle and the latest RBA rate cut has caused lenders to drop their fixed rates even further as they expect the cash rate to drop again,” says Smith.
Smith says one of the interesting areas of movement in the past two weeks has been lenders moving the pricing of their three-year fixed rates more than their two-year rates.
Three-year fixed rate terms are the most popular followed by five-year fixed rate terms, according to mortgage comparison website, Homeloanfinder.com.au
“As lenders speculate where variable rates will bottom out, they’re going to find ways to attract and retain customers – fixed rate products are so competitive right now for this reason,” says Smith.
He says it is important for a borrower to consider the longer term implications of signing up for a fixed or variable rate and not to make a decision based on the interest rate alone.
“Fixed rates continue to be priced below variable rates and have been so for nearly 12 months now. It’s a trend that’s against the historical comparison of fixed and variable rates, which further adds to the unique situation interest rates are presently in.”
These are the lowest advertised variable and fixed mortgage rates based on listings on mortgage comparison websitesratecity.com.au, Mozo.com.au, infochoice.com.au and homeloanfinder.com.au as of March 4:
Where the headline rate is the same, the lender with the lowest comparison rate gets preference.
Lowest variable rate offerings:
Provider | Loan name | Rate | Comparison rate* |
State Custodians | State Custodians Peak Performance Offset Home Loan | 4.74% | 5.11% |
Loans.com.au | Blackboard special – purchases only | 4.75% | 4.77% |
UBank | UHomeloan – refinance only | 4.87% | 4.87% |
Lowest one-year fixed-rate offerings
Provider | Loan name | Rate | Comparison rate* |
Greater Building Society | Ultimate Home Loan Package | 4.74% | 5.51% |
UBank | UHomeloan – refinance only | 4.83% | 5.12% |
iMortgage.com.au | iMortgage Fusion 75
| 4.84% | 5.08% |
Lowest three-year fixed-rate offerings
Provider | Loan name | Rate | Comparison rate* |
iMortgage.com.au | iMortgage Fusion 75
| 4.94% | 5.16% |
Loans.com.au | Dream Loan Express Fixed | 4.99% | 4.93% |
Aussie | Aussie Select Basic Fixed Rate | 4.99% | 5.22% |
*A comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure.