Anxious Queenslanders fix their home loans, while Victorians don't: guide to cheapest variable and fixed rates
In the wake of natural disasters, nearly one in four Queenslanders are now fixing their home loan rate, while nationally demand for cheaper fixed-rate home loans is also rising, according to Mortgage Choice.
During February, fixed-rate home loans were most popular in Queensland, where demand reached 23.05% of all new Mortgage Choice loan approvals.
“Following the spate of natural disasters the sunshine state has endured over the past few years, in comparison to other states it isn’t surprising to see more borrowers in Queensland choose the peace of mind offered by fixed-rate loans,” says Mortgage Choice spokesperson Belinda Williamson.
Nationally, the proportion of borrowers fixing their home loan rate increased from 16.3% in January to 18.4% in February as all the major banks cut their fixed-rate home loan offerings to include a two-year fixed rate home loan "with a four in front of it" - at 4.99%.
At the other end of the spectrum, Victorians were the least likely to take out a fixed-rate loan in February, with only 11.08% of the state’s loan approvals for fixed rates.
“This may suggest that Victorians are the least conservative state and are tipping further variable rate cuts to come,” says Williamson.
Fixed-rate loans are also popular in NSW and the ACT, accounting for nearly one in five loans approved by Mortgage Choice mortgage brokers in February.
Not surprisingly, ongoing discounted rate loans – where the variable rate is discounted for the life of the loan, usually in exchange for an annual fee – were the most popular products over February, accounting for 42% of all loan approvals nationally followed by basic variable and standard variable loans, which both accounted for 17% of loan approvals.
According to mortgage comparison website RateCity.com.au’s database of more than 100 lenders, the average three-year fixed rate is now 5.47% – the lowest level on record. The average standard variable rate is currently 0.42 percentage points higher at 5.89 percent.
Mortgage comparison website Mozo.com.au says fixed rate home loans are at an all-time low with an average fixed rate of 4.99% - 60 basis points lower than the average 5.6% variable rate, according to its database of home loans.
A spokesperson for Mozo says there would need to be another three to four cash rate cuts from the RBA for variable rates to fall as low as fixed rate.
Mozo visitor interest in fixed rates has tripled since December.
These are the lowest advertised variable and fixed mortgage rates based on listings on mortgage comparison websites ratecity.com.au, Mozo.com.au, infochoice.com.au and homeloanfinder.com.au as of March 11:
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 (Refinance Only) | 4.99% | 5.38% |
Easy Street | Honeymoon Home Loan Special | 4.99% | 5.70% |
Loans.com.au | Blackboard Special | 5.09% | 5.11% |
Lowest one-year fixed-rate offerings
Provider | Loan name | Rate | Comparison rate* |
Quick Direct | One year fixed | 4.79% | 5.46% |
UBank | UHomeLoan for refinance | 4.83% | 5.03% |
Loans.com.au | Dream Loan Express | 4.89% | 5.28% |
Lowest three-year fixed-rate offerings
Provider | Loan name | Rate | Comparison rate* |
ME Bank | Member Package SMHL Standard Home Loan | 4.99% | 5.49% |
Teachers Mutual Bank | Teachers Fixed Option Loan | 4.99% | 5.90% |
eMoney | Pro pack 75 | 5.00% | 5.51% |
*A comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure.
For information on refinancing, watch our free webinar The Do's and Don’ts of Refinancing Your Existing Home Loan ... and How to Avoid Unnecessary Hurdles