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16 September 2020, Sydney, Australia – Aussies want the best of both worlds for their home loan interest rate, according to new research by Finder, Australia's most visited comparison site.
Finder recently surveyed 1,000 Australians about how they would structure their mortgage if they were to refinance.
The data revealed that 1 in 5 (20%) would opt for a split mortgage, dividing their loan into fixed and variable portions.
Around 19% would refinance to a variable loan, while 17% would prefer to lock in their rate for a set period of time with a fixed rate mortgage. The remaining 43% said they were unsure if they'd opt for fixed or variable.
Graham Cooke, insights manager at Finder, said that fixed rate loans come with both risks and benefits.
"With the cash rate set to remain at 0.25% for some time, it's unlikely the big banks will lower their standard variable mortgage rates any further for now.
"This means fixed rate loans are back in vogue. For some homeowners, locking in their rate for a year or more may offer greater savings than a variable rate would.
"We're currently seeing rock-bottom rates across the board, with fixed rates as low as 1.95% from Easystreet, and the lowest variable rate even lower at 1.89% from Reduce Home Loans," he said.
The research found that it's the younger generations who place the most value on flexibility.
Over a quarter of gen Z (27%) would split their mortgage – more so than any other generation – while millennials are the most likely to choose a variable loan (23%).
Baby boomers were more likely to refinance to a fixed rate (19%).
By state, Victorians (23%) are the most likely to choose a variable loan, followed by 1 in 5 NSW residents (20%).
Queenslanders are the most likely to choose either a split loan (25%) or a fixed rate loan (21%), but the least interested in a variable rate loan (12%).
Cooke said that homeowners should consider their financial objectives before restructuring their loan.
"There can be hefty financial penalties for breaking a fixed rate loan early, so make sure this is something you're prepared to commit to for that 1-5 year period.
"Otherwise, a split loan or variable loan may be your safest bet," Cooke said.
Would you opt for a fixed rate home loan if you were buying or refinancing?
Response | % of population |
---|---|
Split between the two | 20% |
Variable | 19% |
Fixed | 17% |
I'm not sure | 43% |
By generation
Response | Baby boomers | Gen X | Millennials | Gen Z |
---|---|---|---|---|
Fixed | 19% | 15% | 19% | 17% |
Split between the two | 14% | 19% | 22% | 27% |
Variable | 17% | 21% | 23% | 12% |
I'm not sure | 49% | 45% | 36% | 45% |
Reasons to consider splitting
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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 Finder
Every month 2.6 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 three Australians: Fred Schebesta, Frank Restuccia and Jeremy Cabral. 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 have offices in Australia, the United States, the United Kingdom, Canada, Poland and the Philippines. For further information visit www.finder.com.au.
12.6 million average unique monthly audience (June- September 2019), Nielsen Digital Panel