Media Release

If it ain’t broke, don’t fix it: Consumers flee from fixed home loans

        • The number of fixed home loans is down 52% since August 2017
        • Spike of 396% to Finder's page about breaking from fixed loans
        • Best variable and fixed loans on the market after the rate cut

3 October, 2019, Sydney, Australia – The number of Aussies taking out fixed rate home loans has halved in the last two years and is likely to continue to decline, according to new research by Finder, Australia's most visited comparison site.

Since August 2017 the total number of home loans dipped by 14%, but the number of fixed rate loans dropped a whopping 52% over the same period (from 11,373 to 5,416).

The RBA cut the cash rate in October for the third time in five months. The rate now sits at 0.75%.

Graham Cooke, Finder's insights manager, said more cuts may be on the way, making the idea of a fixed rate seem less sexy.

"In our RBA cash rate survey we found that nearly three-quarters (72%, 26/36) of experts predicted that the cash rate will reach 0.50% before it starts to increase.

"Based on all the economic indicators the RBA reviews – employment, inflation, housing, wages – we are likely to be in a low-rate environment for the foreseeable future.

"Unless we see huge drops in fixed loan rates, variable loans will likely stay in vogue," Cooke said.

The lowest current fixed home loan rate sits at 2.79% (Mortgage House and Greater Bank) which is higher than the lowest variable home loan rate on the market at 2.69% (Reduce Home Loans).

Reduce Home Loans is one of 12 lenders to announce reductions to its variable owner-occupier rates products thus far.

"With the cash rate at 0.75% and potentially at 0.50% in the next few months, if you decide to lock in a fixed rate, make sure you're comparing your options and getting the best deal for you."

Finder home loan traffic on the rise

Following October's RBA rate cut, there was a 69% spike in visitors across all Finder home loan pages, including a 296% jump in views of the variable home loans page, week-on-week.

Most notably, those looking at Finder's page about how to break from a fixed rate loan was up 376%.

Cooke said both fixed and variable rates have their place.

"It's important that borrowers know exactly what they're signing up for when they take out a home loan.

"Breaking from a fixed loan can be costly; on the other hand, if you are switching to a much better rate this could save you thousands in the long run.

"Just remember that variable doesn't mean directly connected to the cash rate. Your lender can raise your variable rate at any time, so stay on top of your options.

Best fixed rate loans

Fixed loanInterest rateComparison rate
Mortgage House Advantage Home Loan

(Special) 2 Year Fixed

2.79%3.46%
Greater Bank Great Rate Home Loan -

Discounted 1 Year Fixed LVR ≤90% ($150K+

Owner Occupier)

2.79%3.95%
Virgin Reward Me Fixed Rate Home Loan

- 2 Year $300k+ Special offer (Owner

Occupier, P&I)

2.99%3.45%
UBank UHomeLoan - 1 Year Fixed Rate

(Owner Occupier, P&I)

2.99%3.63%
Bank of Queensland Fixed Rate Home Loan

- 3 Year Discount Rate $300k+ LVR <=80%

(Owner Occupier, P&I)

2.99%3.79%

Variable lenders to announce a cut

LenderCut (basis points)Effective dateLowest variable offer
Reduce Home Loans20 basis points1-Oct2.69%
Homestar25 basis points1-Oct2.74%
Freedom Lend25 basis points2-Oct2.79%
G&C Mutual Bank50 basis points2-Oct2.79%
Athena Home Loans25 basis points1-Oct2.84%
UBank25 basis points29-Oct2.84%
Pepper24 basis points1-Oct3.12%
NAB15 basis points11-Oct3.20%
Auswide25 basis points3-Oct3.24%
ANZ14 basis points11-Oct3.24%
Commonwealth Bank13 basis points22-Oct3.27%
Westpac15 basis points15-Oct3.28%

Source: Finder

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For further information

Disclaimer

The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.

About us

Every month 2.2 million unique visitors turn to Finder to save money and time, and to make important life choices. We compare virtually everything from credit cards, phone plans, health insurance, travel deals and much more.

Our free service is 100% independently-owned by two Australians: Fred Schebesta and Frank Restuccia. Since launching in 2006, Finder has helped Aussies find what they need from 1,800+ brands across 100+ categories.

We continue to expand and launch around the globe, and now operate in the United States and the United Kingdom. For further information visit www.finder.com.au.

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