Fixed Rate Information

The fixed rate home loan rort

Rates and fees last updated on

A fixed rate home loan may end up costing you more.

Although a popular option among borrowers, fixed home loans can actually end up costing you thousands of dollars extra in high interest rate charges. Fixed rate home loans can offer you the security you need for a long term loan, but for some loans, after the fixed period ends the interest rate reverts to a rate as much as 1.01 percentage points higher.

Statistics have revealed that more borrowers are choosing to fix their home loan rates. Data from the Australian Bureau of Statistics (ABS) shows that 92,251 fixed home loans were financed in the past 12 months to August 2013, which was 29,122 more than the previous year.

The average proportion of borrowers fixing their loans was 16% for this same time period, compared to 12% the year prior.

Compare the rates

If we take a look at rates in October 2013, the average three­ year fixed rate was 5.07% which reverted to 5.51% after the fixed period ended. There are several three­ year fixed loans that revert to higher than this—up to 6.19%. This includes all four of the major banks.

Compared to July 2011, before fixed loans began to fall, the average three­ year fixed rate of 7.38% was almost the same as the average revert rate of 7.41%. Revert rates for three­ year fixed home loans ranged up to 0.70 percentage points higher.

For instance, let’s take a typical $300,000 mortgage over 30 years with the average three­ year fixed home loan of 5.07 percent reverting to 5.51%. The extra cost after the fixed period would be about $81 per month. Over the remaining loan term of 27 years following the fixed period, this extra cost is potentially over $26,000.

Three year fixed rates and their revert rates

Average 3-year fixed rateAverage 3-year fixed revert rateDifference
July 20117.38%7.41%0.03%
October 20135.07%5.51%0.44%

Fixed home loan rate offers

Now more than ever borrowers need to be wary of attractive fixed loan offers as more are expected to lock in their rates. Fixed loans are great in that your repayments will remain the same during the fixed term, particularly when there’s talk of rising interest rates on the horizon following the latest inflation figures. And there are some very good value deals currently being offered, with three­ year fixed rates starting low. Keep in mind that fixed rate home loans are not necessarily the best value over a 30 year loan term if the revert rate is much higher.

Comparison of variable rate home loans

Rates last updated October 21st, 2017
$
Loan purpose
Offset account
Loan type
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.65%
3.66%
$0
$0 p.a.
90%
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.
3.54%
3.56%
$0
$0 p.a.
80%
For new home buyers only. No refinance option. A low interest variable home loan with no application fee and free redraws.
3.64%
3.66%
$0
$0 p.a.
80%
A home loan with a competitive variable rate, limited fees and plenty of flexibility.
3.64%
3.66%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.69%
3.72%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.74%
3.74%
$0
$0 p.a.
80%
A basic owner-occupier home loan with a low variable rate that requires a 20% deposit.
3.64%
4.03%
$0
$395 p.a.
95%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.86%
3.87%
$0
$0 p.a.
80%
Pay no ongoing fees on a competitive variable rate home loan.
3.69%
3.75%
$600
$0 p.a.
80%
A low interest rate variable home loan with no ongoing fees.
3.65%
3.66%
$0
$0 p.a.
90%
A competitive variable rate home loan with no application fee.
3.72%
4.19%
$0
$0 p.a.
80%
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
3.72%
3.74%
$0
$0 p.a.
80%
Take advantage of a 100% offset account along with no annual or application fees.
3.72%
3.75%
$600
$0 p.a.
80%
A maximum 80% LVR home loan with no ongoing service fees and a linked transaction account.
3.79%
3.92%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
3.73%
3.73%
$0
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.74%
3.74%
$0
$0 p.a.
80%
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.74%
3.74%
$0
$0 p.a.
90%
A competitive variable rate with a redraw facility. NSW, QLD and ACT residents only.
3.77%
3.81%
$200
$0 p.a.
95%
A basic home loan with a low interest rate and a redraw facility available.
3.81%
3.81%
$0
$0 p.a.
80%
A home loan with a competitive rate and plenty of handy features.
3.83%
3.83%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.84%
3.84%
$0
$0 p.a.
110%
Requires a family member to act as guarantor. Discounted rate available with family pledge loans. Family pledge loans require no LMI and no deposit. NSW, Qld and ACT only.
4.09%
4.25%
$300
$10 monthly ($120 p.a.)
80%
Get a competitive investment home loan rate without expensive features you may not need.
3.96%
3.98%
$0
$0 p.a.
90%
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.97%
3.97%
$0
$0 p.a.
80%
A competitive variable rate home loan with no ongoing fees.
3.79%
3.80%
$0
$0 p.a.
80%
A competitive rate with no ongoing monthly fees or application fees.
3.97%
3.99%
$0
$0 p.a.
90%
A discounted interest rate home loan with no monthly fees.
3.97%
4.02%
$445
$0 p.a.
90%
Get a competitive rate without features you may not use.
3.99%
4.00%
$0
$0 p.a.
80%
A low-fee variable rate investor loan with a fast online application process.
3.99%
4.02%
$395
$0 p.a.
80%
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
3.99%
4.02%
$600
$0 p.a.
90%
Take advantage of a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
4.17%
4.21%
$600
$0 p.a.
95%
A competitive no frills home loan. 350K NAB Rewards Points offer available. Terms and conditions apply.
4.57%
4.94%
$0
$395 p.a.
95%
No application fee and 100% offset account.
3.68%
3.69%
$600
$0 p.a.
90%
Get a low variable rate along with some important basic features.
3.80%
3.81%
$0
$0 p.a.
95%
A no frills loan with a competitive rate and a maximum LVR of 95%.
4.33%
4.33%
$363
$0 p.a.
70%
A variable home loan with $0 annual or monthly fees.

Have we missed anything in the comparison table? Tell us

Compare up to 4 providers

How to avoid being ripped off

The best way to avoid being ripped off with a fixed home loan is by comparing home loans before your fixed term ends and renegotiate with your lender or switch to a better deal. If you fixed your loan at the fixed rate of 5.07% and switched after three years to one of the lowest variable rates available you could save a considerable amount on your monthly repayments. For example, if you switched to a variable home loan with a rate of 4.59%, you could save $168 in monthly repayments compared to the average revert rate of 5.51%. Over the remaining loan term that’s a saving of over $54,000.


Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at finder.com.au. Talk to him to find out more about home loans.

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