Best fixed rate home loans

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Finder's best fixed rate home loans

Every month, our home loan experts analyse 1000s of home loan rates in our database to find our best home loan picks using the Finder Score. The score considers each loan's interest rate, fees and features, as well as the type of loan (investor, owner-occupier) and the rate type to give you a simple score out of 10.

The best loan for you may differ from our picks, so always research widely when comparing.

Best 1-year fixed rate: South West Slopes Bank Optimum Fixed Rate Home Loan

South West Slopes Bank Optimum Fixed Rate

• $0 Application
• $0 Annual Fee
• 5.2% Interest rate
• 5.78% Comparison rate

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Pros & cons

• There are no establishment or application fees with this loan
• This loan has no ongoing monthly fees
• You can make additional repayments and redraw from those funds for free

• There's no offset account with this loan
• There's a $20,000 limit on the additional repayments you can make

Best 2-year fixed rate home loan: Suncorp Bank Home Package Plus Fixed

Suncorp Bank Home Package Plus Fixed

• $0 Application
• $0 Annual Fee
• 5.09% Interest rate
• 5.79% Comparison rate

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Pros & cons

• $0 annual package fee.
• $0 application fee.
• Interest only repayment option available.

• Extra repayments are limited to $500 per month.

Best 3-year fixed rate home loan: Australian Mutual Bank Fixed Home Loan

Australian Mutual Bank Fixed Home Loan

• $250 Application
• $0 Annual Fee
• 4.74% Interest rate
• 5.5% Comparison rate

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Pros & cons

• There are no monthly or annual ongoing fees
• You can access a redraw facility at no cost

• There’s no offset account attached to this loan
• You’ll need to pay a $250 establishment fee

Check out our monthly best home loan rate picks to see more of our top picks.

• Best fixed rate home loans summary

  • Best 1-year fixed rate: South West Slopes Bank Optimum Fixed Rate Home Loan
  • Best 2-year fixed rate home loan: Suncorp Bank Home Package Plus Fixed
  • Best 3-year fixed rate home loan: Australian Mutual Bank Fixed Home Loan

What is a fixed rate home loan?

When you take out a home loan to buy a home or investment property, you can choose between 2 interest rate types: fixed and variable.

With a fixed rate you will lock in an interest rate for a set period, usually between 1 and 5 years (though it can be up to 10 years). Because the interest rate won't change, your repayments will stay the same for the fixed period.

Should I fix my home loan rate?

The decision to fix your rate depends on your own circumstances. Most Australians choose variable loans. In fact, only 4% of home loans that went through mortgage brokerage AFG in the last 3 months of 2024 were fixed rate loans.

With a fixed rate you'll miss out on lower rates if they fall, but you'll be in a good position if rates start rising.

It's not just about timing the interest rates though. For some borrowers they want the certainty of knowing they can afford their repayments, particularly if they're expecting a change in circumstances (like starting a family and taking parental leave).

Pros and cons of a fixed rate home loan

Expert insight: Fixed rates can give peace of mind

"A fixed home loan can give you peace of mind because, no matter what happens to official rates, your repayments won't budge. When rates are going up and times are tight, this can be priceless."

Nicole Pedersen-McKinnon

Finance journalist

What's the difference between fixed rates and variable rates?

• Fixed rate: Your interest rate won't change while you're in the fixed rate period.
• Variable rate: Interest rates can change at any time. Most variable rates have fallen twice so far in 2025.
• Fixed rate: Exiting the loan during your fixed period will incur break costs.
• Variable rate: There are no additional fees for exiting a variable rate loan early (by refinancing, selling or paying off the loan early).

There is often a difference in the rates offered, but that difference will depend on the current market, which you can see below.

If you decide to fix your interest rate, keep in mind that it is very difficult to "beat the bank" (that is, lock in a rate that is lower than the variable rate for the duration of the fixed term, thereby paying the bank less for your loan over the full fixed term period).

Fixed versus variable rates: What are the differences?

How do I find the best fixed rate home loan?

Finding the best fixed rate home loan is really about working out what you need, and finding a suitable loan with a low rate. To help you lock in the best fixed rate deal, start by considering these 5 factors:

Your property plans

If you're not sure how long you might be in the property, you should think twice about locking into a fixed rate home loan because of the expensive break costs.

Interest rates

As with any home loan, a lower rate is going to save you money. But it's not the only consideration and you might end up saving more money by using a variable loan that allows extra repayments or has an offset account.

Other fees

Always pay attention to a loan's fees, especially annual or ongoing fees. These can quickly add up and cancel out all the benefits of the lower interest rate.

Fixed rate period

Fixed rate borrowers have to choose terms between 1 and 5 years. Most loans give you multiple options, with different rates for each. In some markets the shorter loan terms have lower rates, but in other markets it is the other way around. So be sure to compare thoroughly.

Loan repayments

If you want to make extra repayments into your loan to chip away at the loan principal as quickly as possible, then a fixed rate loan may not be the best option as extra repayments are often not allowed on these types of loans.

How long should I fix my rate for?

Most lenders offer fixed rate terms between 1 and 5 years. While there are no differences between how the loans work with different terms, the interest rates will be different.

1- and 2-year fixed rates

Shorter term fixed rates are usually the most competitive. This isn't always the case, however. In some markets lenders will have lower rates for longer terms. This is particularly the case when lenders are expecting rates to fall: they will try to lock borrowers at the current market rates for longer.

Fixing for 1 or 2 years is a good option for borrowers who think they may want to sell their property, refinance or pay off their loan in a few years.

The downside with shorter fixed terms is that if rates are low you only get the fixed benefit for a short time.

3-year fixed rates

3 years is often a good balance between a reasonable length of time and a competitive rate (some of the best fixed rates on the market at the moment are for 3 year terms). 3-year fixed rates tend to be quite competitive while giving you just a bit longer on a stable rate.

4- and 5-year fixed rates

Fixing for 4 or 5 years is quite a long time and market rates can vary quite a lot in those years. These rates are often much higher than other fixed rates, and are less popular with borrowers. But if you think you've found a really good loan, don't anticipate needing to exit the loan early and really value knowing exactly how much you'll pay, a 4- or 5-year fixed rate loan is an option.

"When buying my first home, I decided to go with a fixed rate so I could have security over how much I would have to pay back each month. I was lucky to lock in a fixed rate, just before the rate rises started. I was able to find a bank that also gave me an offset account – this helps me reduce my interest over time. When my fixed rate ends, I'm tempted to lock in another fixed rate to have that consistency in mortgage repayments."

Alex Holderness

Head of publishing

What to ask your bank before fixing your home loan

Can fixing be cheaper even after paying break costs?

Breaking a fixed rate loan to refinance to a lower rate can be expensive. But if your repayments get significantly lower after ending your fixed rate loan, you could still end up saving money in the long run.

This is more likely the case in an environment where interest rates have been falling, when you could find newer fixed rates at a lower rate than you're currently paying.

At the moment, with rising interest rates, the break costs may make it less cost effective.

Example:

Say you have a 3-year fixed rate loan with 1 year left on the fixed period.

You fixed your rate at 6.00% and you have $400,000 remaining on your loan. The loan term is 30 years.

Because rates are lower now, you could find a rate of 4.80%. This is 120 basis points lower.

By using the lower rate you can get a rough estimate of your loan break costs.

The difference in your original fixed rate versus the new offer can stand in for the more complicated difference in funding costs (for a more comprehensive guide on break fee costs see here). The difference is 120 basis points, or 1.20%.

The following is the basic break fee calculation:

• Loan amount ($400,000) x fixed period remaining (1 year) x rate difference % (0.80%) = $4,800

Assuming that your break cost is $4,800, as in our example above, consider the potential savings if you switched to a much lower rate from a different lender. Let's say you break your old loan then get a variable rate loan with a rate of 4.80%.

In this scenario, you would pay the break fee but your repayments would shrink.

In this situation it would take 16 months for you to make back the cost of the break fee.

More fixed rate home loan questions

• What is the current fixed interest rate on home loans?

  Fixed interest rates will differ based on your circumstances and the lender you choose, but the average fixed interest rate for an owner occupier on the market this month is 5.72%. The lowest fixed interest rate for an owner occupier is 4.64%.

• Which banks offer the best fixed interest rates?

  The best fixed rate for you depends on your own circumstances, but most of the time the best rate is not with one of the larger banks. For example, in December 2025, some of the lenders with the lowest fixed rates are Australian Mutual Bank, Illawarra Credit Union, Border Bank, and Pacific Mortgage Group. But watch out, because if you take fees into consideration they don't necessarily come out on top.

• What happens when my fixed rate home loan ends?

  When your home loan's fixed period ends, your loan will automatically switch to a variable loan with the same lender, and you'll pay the variable rate that the lender charges at the time.

  There's no possible way to know what the variable rate will be 1 to 5 years into the future, but when you sign up for the loan, your bank will tell you its current revert rate. This is the variable interest rate that your fixed loan would switch to after the fixed period if interest rates were to remain the same over that period.

  The variable rate you end up paying may be higher or lower.

  Importantly, once your fixed rate ends, you will be free to refinance your loan, at which point you can choose whether to refinance to a lower variable rate or sign up for another fixed rate period.

• What happens if I want to end my fixed rate home loan early?

  It may be possible to end your fixed rate loan contract early, however there could be a hefty price to pay.

  A fixed rate home loan is a legal contract between you and your lender, which guarantees that you'll repay a fixed amount of interest on a loan over a specified time period.

  If you decide to break that contract by switching loans or lenders or selling the property and closing the loan altogether, your existing lender will want to be compensated for any loss it incurs.

  Breaking a home loan during a fixed interest period can be expensive. It is calculated using a number of factors: Learn how break costs are calculated.

• Do fixed rate home loans let you make additional repayments?

  Some fixed rate home loans let borrowers make additional repayments. These extra payments can be made usually up to a limit set by your lender.

  In most cases, if you make additional repayments above the set limit or repay the fixed rate loan in full, you may incur additional break costs for early repayment. Check the outline of fees with your lender before you start to make additional repayments.

• Can I get a fixed rate loan with a low deposit?

  Yes. Plenty of lenders offer fixed rates on their low deposit home loans. You can get a fixed rate home loan with a loan-to-value ration of 90% or even 95%. This means you can get the loan with a 10% deposit or even a 5% deposit.

• How do fixed rate interest-only home loans work?

  Interest-only home loans are mortgages that require you to pay only the interest on the amount you have borrowed, rather than paying off the principal amount in instalments each time you make a repayment. If you have borrowed $600,000, your monthly repayments will be lower on an interest only repayment than on a regular home loan contract, where you pay off the principal amount as well as the interest.

  - $600,000 fixed rate loan with interest only (IO) repayment at 6.19%: $3,095
  - $600,000 fixed rate loan with principal and interest (P&I) repayment at 6.19%: $3,671

  The repayments are much lower with an IO loan, as you can see. But the flip side to that coin is that at the end of one year, the full amount of $600,000 would still be owing. With the P&I loan, you would have chipped away at $44,052 of the debt by then.

• What are the benefits of a fixed rate interest-only home loan?

  A fixed interest rate loan allows you to budget precisely each month, as the amount you are required to pay back never changes.

  This can make monthly repayments easier to manage, especially if your interest-only repayments are being made on a property you are not yet living in (such as a home that's under construction).

  Fixed rate interest-only home loans are short-term home loan contracts that only usually last for one to five years.

  The important thing to know about interest-only home loans is that they are only available for short periods of time, as the bank eventually wants to see you make some headway with the principal. Think about it this way: if you had an interest-only home loan forever, you'd never own your own home. They are not recommended as a method to help you pay for your mortgage and afford your everyday living expenses.

• What is a split rate home loan?

  Many lenders allow you to split your loan into fixed and variable portions, which essentially lets you hedge your bets.

  For instance, you could choose to lock in 70% of your loan to a fixed rate. The benefit of this is the lower interest rate (at the moment) and repayment certainty. You then attach the remaining 30% to a variable rate home loan. The benefit of this is that you can still access features like an offset account to pay less interest based on your savings. Also, if you ever have to end your loan for any reason, the break cost will be lower as only 70% of the loan's value is fixed.

  A split loan may be the best of both worlds. If you're still not quite sure which option is best for you, consider speaking to a mortgage broker for expert advice.

• What is a mortgage cliff?

  During 2022 and 2023 there was a lot of talk about borrowers falling off 'the mortgage cliff'. This was in relation to the borrowers who had fixed their home loan interest rates during the record lows of 2020 and 2021. After rates began rising again in 2022, these borrowers would eventually 'fall off' their low fixed rate and be hit with a much higher rate. There were concerns that many borrowers would struggle with the sudden increase in repayments and we would see more people defaulting on their mortgage.

  Considering most borrowers fixed for 2 or 3 years, there was a lot of speculation about when these borrowers would fall off this so-called cliff. By all accounts, the mortgage cliff never really transpired.

How the Finder Score brings you the best fixed rate home loans

Every month, our home loan experts analyse over 1000s of home loan rates from 120+ lenders in our database to find our best home loan picks.

The score considers each loan's interest rate, fees and features, as well as the type of loan (investor, owner-occupier) and the rate type to give you a simple score out of 10. In the fixed rate category, we only look at loans which offer fixed rates of 1, 2, 3, 4 and 5 years.

The Finder Score methodology is designed by our insights and editorial team. We review products objectively. Commercial partnerships do not affect the scores.

The best loan for you may differ from our picks, so always research widely when comparing.

Why you can trust Finder's research

1000+ rates compared

Analysis from the experts

Picks updated monthly

How we calculate Home Loan Finder Scores

Read full methodology

What different scores mean

9+

Excellent

These fixed rate home loans offer low costs, coupled with a host of features, giving the best overall value.

7+

Great

These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.

5+

Standard

Usually the home loans would offer above average rates. They may still include some competitive features.

0+

Basic

Higher costs and/or fewer features.

What is Finder Score?

The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.

To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.

Read the full breakdown

To make sure you get accurate and helpful information, this guide has been edited by Richard Whitten and reviewed by John Pidgeon, a member of Finder's Editorial Review Board.

Written by

Sarah Megginson

Personal finance expert + media spokesperson

With over 20 years of experience in property, finance and investment journalism, Sarah is a trusted expert whose insights regularly appear across television, radio, and print media, including Sunrise, ABC News, and Yahoo! Finance. She has previously served as managing editor for Your Investment Property and Australian Broker, and her expert advice has been shared in the media over 3,500 times since 2023 alone. Sarah holds a Bachelor’s degree in Communications and a Tier 1 Generic Knowledge certification, which complies with ASIC standards. See full bio

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