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15 lenders cut fixed rates this month – should borrowers fix or stay variable?
The number of lenders cutting fixed mortgage rates is increasing, signalling a shift in the market, as more borrowers begin shopping around.
Today Suncorp cut fixed home loan rates for the second time this month by up to 0.76 percentage points.
RateCity.com.au analysis shows a total of 15 lenders have cut at least one fixed rate since the RBA August meeting, including CBA, Westpac, Macquarie and Athena. By contrast, 34 lenders have hiked fixed rates in this time.
While there are still twice as many lenders lifting fixed rates, the list of cuts is growing.
Source: RateCity.com.au No. of lenders that changed at least one fixed rate.
Should borrowers fix or stay variable?
While some fixed rates are coming down and further drops are expected, most banks’ lowest rates are still variable, even after four months of RBA increases.
However, just how many more variable rate hikes are ahead remains a contentious issue.
The big four bank economists have very different predictions about how high the cash rate will get, and whether it might drop again.
Big four bank current RBA forecasts
- CBA: 2.60% by Nov 2022. Dropping to 2.10% in Nov 2023.
- Westpac: 3.35% by Feb 2023. Dropping to 2.35% in 2024.
- NAB: 2.85% by Nov 2022. Staying steady in 2023/2024.
- ANZ: 3.35% by Nov 2022. Dropping to 2.85% in late 2024.
RateCity.com.au has looked at how much the average existing variable rate customer with a $500,000, 25-year loan, could save if they refinanced to the lowest variable rate versus the lowest 2-year fixed rate.
Using Westpac’s cash rate forecast, after two years the borrower could potentially save $13,850 by refinancing to the lowest variable rate.
If they instead refinanced to the lowest 2-year fixed rate, the same borrower would save $12,246 by refinancing, however, they would pay $1,604 more than if they’d opted for the lowest variable rate option.
This assumes Westpac’s cash rate forecast materialises and the changes are passed on in full. Even under CBA, NAB and ANZ’s cash rate forecasts, the lowest variable option is cheaper than the lowest 2-year fixed.
Weighing up the options – potential savings from refinancing to the lowest fixed & variable rates
Based on a $500,000 loan, 25-years remaining
| Rate today | Cost over 2 years | Difference to ‘do nothing’ | |
| Do nothing (av. var owner-occupier) | 4.61% | $57,335 | |
| Lowest variable rate | 3.10% | $43,485 | -$13,850 |
| Lowest 2 yr rate | 4.49% | $45,089 | -$12,246 |
Source: RateCity.com.au. Notes: calculations are estimates based on the average variable rate owner-occupier paying principal and interest with $500,000 debt and 25 years remaining on a variable rate on 4.61% today with rates rising in line with Westpac’s forecast. Switch fees included.
RateCity.com.au research director, Sally Tindall, said: “Already 15 lenders on our database have cut fixed rates this month and we expect more to follow.”
“Just because a fixed rate has been cut, doesn’t automatically make it a good idea,” she said.
“While the fixed rate mortgage market is starting to turn around, most banks’ lowest rates are still variable.
“With millions of borrowers rolling off their fixed rates in the next 12 months, banks will need to put better deals on the table to retain their customers.
“One way banks can protect themselves from losing customers during the surge in refinancing is to lock people into a fixed-rate contract.
“At this point, a lowest variable rate is likely to come out cheaper than a short-term fixed rate, however, there’s no guarantee the cash rate will do what the economists predict.
“Whatever you decide, make sure you shop around because the difference between an average deal and a good one can equal tens of thousands of dollars, particularly on larger loans,” she said.
Lowest fixed home loan rates on RateCity.com.au
| Term | Lender | Advertised rate |
| 1-yr fixed | Police Credit Union | 3.99% |
| 2-yr fixed | The Capricornian | 4.49% |
| 3-yr fixed | Police Bank | 4.69% |
| 4-yr fixed | Westpac | 4.89% |
| 5-yr fixed | Macquarie Bank | 5.39% |
See notes below.
Lowest variable rates on RateCity.com.au
From lenders which have announced August RBA hikes.
| Lender | Advertised rate |
| Loans.com.au | 3.10% |
| P&N Bank | 3.24% |
| G&C Mutual Bank | 3.24% |
| Gateway Bank | 3.24% |
| Bank of us | 3.29% |
See notes below.
Lowest big four bank owner-occupier rates
| Rate type | CBA | Westpac | NAB | ANZ |
| 1-yr fixed | 4.99% | 4.59% | 5.29% | 4.69% |
| 2-yr fixed | 5.79% | 5.39% | 5.89% | 5.49% |
| 3-yr fixed | 6.39% | 5.69% | 6.34% | 5.89% |
| 4-yr fixed | 4.99% | 4.89% | 6.59% | 5.99% |
| 5-yr fixed | 6.69% | 5.99% | 6.69% | 6.09% |
| Lowest variable | 3.79% | 3.49% for 2yrs then 3.89% | 3.94% | 3.69% |
Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply.
Disclaimer
This article is over two years old, last updated on August 19, 2022. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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