Fixed mortgage rates are dropping almost as low as variable rates

Richard Whitten 18 April 2019 NEWS

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Some lenders have dropped 1 or 2 year fixed rates down to 3.59%.

Today Bank of Queensland and Virgin Money cut several of their fixed rate mortgages for owner occupiers and investors. NAB dropped several fixed owner occupier rates by 10 basis points.

This follows a range of fixed rate cuts last week from Westpac and the Commonwealth Bank.

And there are more to come.

All these changes mean one thing: fixed rate home loans are now very competitive offers. While variable mortgages remain lower on average (and more flexible), fixed rates are now catching up and in some cases matching lenders' lowest variable offers.

Here's a comparison of some of the market's lowest fixed and variable rates available on Finder right now. You can see just how close the rates are now*.

Variable Fixed
loans.com.au Smart Home Loan (Owner Occupier, P&I)
Interest rate of 3.48% p.a.
UBank UHomeLoan – 1 Year Fixed Rate (Owner Occupier, P&I)
Interest rate of 3.59% p.a.
Well Home Loans Balanced Variable (Owner occupier, P&I)
Interest rate of 3.49% p.a.
Tic:Toc Live in Loan Fixed Rate – 1 Year (Owner Occupier, P&I)
Interest rate of 3.59% p.a.
Homestar Star Essentials Home Loan
Interest rate of 3.49% p.a.
Bank of Queensland Fixed Rate Home Loan 2 Year Fixed Rate (Owner Occupier, P&I)
Interest rate of 3.59% p.a.
Tic:Toc Live in Loan Variable Rate – Principal & Interest
Interest rate of 3.57% p.a.
Tic:Toc Live in Loan Fixed Rate – 2 Years (Owner Occupier, P&I)
Interest rate of 3.64% p.a.
State Custodians Low Rate Home Loan with Offset - LVR up to 80% (Owner Occupier, P&I)
Interest rate of 3.58% p.a.
ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate (Owner Occupier, P&I)
Interest rate of 3.74% p.a.
UBank UHomeLoan Variable Rate – Discount offer for Owner Occupiers, P&I Borrowing over $200,000)

Interest rate of 3.59% p.a.

loans.com.au – 3 Year Fixed Rate with Rate Lock (Owner Occupier, P&I) Special Offer
Interest rate of 3.59% p.a.

*The above rates are correct at time of publication only. For up to date info on the lowest rates check out our monthly low rate tracker.

In short, if you're looking to get a mortgage then fixed rates have never been lower. And depending on the lender you go with, they might even be the lowest rate on offer.

How do you decide between a fixed and variable rate if they're both very low?

To fix, or not to fix: that is the question borrowers face. And it depends on what you want from your mortgage.

Look at the following:

  • Fees. The fewer the fees, the cheaper your loan will be. Variable rate loans typically have fewer fees than fixed rate loans.
  • Flexibility. If you value flexibility in how you make repayments, redraw facilities and refinancing cheaply then a variable rate mortgage might suit you better.
  • Certainty. If you mainly care about budgeting for your mortgage repayments exactly and not worrying about rate rises for a year or two, then a fixed rate loan can give you that.

Fixed versus variable: which is right for you?

And you also need to think about the future. Lenders cut and raise rates all the time. If you've fixed, then you're safe if rates rise. But if they drop, you might miss out.

The RBA cash rate is a strong indicator of where rates are headed. And you can check out Finder's cash rate survey to see what the experts are predicting. At the moment: a future cut!

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