Interest rates continue to rise

The Reserve Bank of Australia has raised interest rates at a rapid pace this year, and economists at the big four banks expect the tightening cycle to continue this month as the central bank steps up its efforts to control inflation.

As in previous months, lenders are expected to largely pass on the rise in RBA rates to their customers, meaning borrowers who do not benefit from a fixed rate will consider a further increase in their monthly repayments.

Soaring interest rates have reduced the borrowing power of potential buyers, but real estate prices are also down slightly. So far, however, the bulk of the price cuts have been in the most expensive segment of the market.

Higher rates also add to the hurdles facing first-time homebuyers, so it’s no surprise to see loans to first-time homebuyers fall 10.0% in June, from 4 .4% for all cohorts of borrowers.

So how are variable rates and fixed rates doing right now? Find out below.

Fixed home loans are now on average above 5

The ultra-low fixed rates that many had become accustomed to during the pandemic period are long gone. These days, most fixed rates start with a “4” or a “5”. The Credit Union Police One Year Fixed Rate Home Loan is the only offer in our database below the 4% per annum mark.

At the time of writing, the average fixed rate for homeowners with an 80% LVR and a $400,000 loan is:

  • 1 year: 5.04% per year
  • 2 years: 5.55% per year
  • 3 years: 5.80% per year
  • 4 years: 6.03% per year
  • 5 years: 6.28% pa

Recent movements in fixed and variable interest rates

We have seen increases in all home loan products in our database. In fact, in the past month, there have been 1,791 increases in variable mortgage products and 496 in fixed mortgage products that we track. Many of the floating rate hikes were in line with the RBA’s new cash rate.

Here are some notable changes from last month.

Variable real estate loans

  • Bendigo Bank Full home loan rates were increased by 30 bps for LVRs below 80% and 50 bps for higher LVRs, and all of its express home loan rates were only increased by 30 bps, now rising from 4.04% per year (comparative rate of 4.20% per year*)
  • ubank rates went from 15 to 55 basis points depending on the type of loan and borrower. Its lowest variable home loan is currently at 4.14% per annum (comparison rate of 4.16% per annum*).
  • Commonwealth Bank raised rates on its additional home loan by 40 basis points for most types of borrowers.

Fixed rate home loans

  • ANZ raised its 1-year fixed rates by 50 basis points for homeowners and by 30 basis points for
  • Commbank increased some of its 1-year fixed rates, but cut its 3-year fixed mortgage option by 105 basis points.
  • Saint Georges 2-year fixed mortgage rates are down 15 basis points.

The lowest mortgage rates

Even though average home loan interest rates have increased, there are still a few variable and fixed rates below 3 in the Mozo database. Below are the lowest variable and fixed mortgage rates (P&I, LVR

Lowest Variable Rates — Mozo Database (October 1, 2022)^^

Lowest and Average Fixed Rates — Mozo Database (October 1, 2022)^^

Term Leader Fixed rate
1 year Police Credit Union 3.99% per year (comparative rate of 4.95% per year*)
2 years bcu 4.89% per year (comparative rate of 5.48% per year*)
3 years Police bank 4.69% per year (comparative rate of 4.80% per year*)
4 years bcu 4.99% per year (comparative rate of 5.40% per year*)
5 years macquarie 5.45% per year (comparative rate of 4.71% per year*)

These are the lowest rates available in our database for borrowers with an LVR

Thinking of buying a property or looking to refinance your existing mortgage? Use Mozo’s handy home loan comparison chart to look at lenders side-by-side, or use our refinance calculator to see how much you could save.

^^Interest rates are based on a homeowner making principal and interest payments on a $400,000 loan with an 80% LVR. See our dedicated Australian mortgage statistics page for more information on average mortgage rates.

ATTENTION: This comparison rate only applies to the example or examples given. Different amounts and durations will result in different comparison rates. Costs such as withdrawal charges or prepayment charges, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed corresponds to a guaranteed loan with monthly principal and interest repayments of $150,000 over 25 years.

Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on the amount of your loan, the term of the loan and your credit history. Actual repayments will depend on your personal circumstances and changes in interest rates.

^ See Mozo Experts Choice Home Loan Awards information

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