Fixed interest rates are cheaper than variable

One-year, two-year and three-year fixed-rate mortgages are currently cheaper than variable-rate home loans, according to new data.

At the end of January, the average of all the variable rates listed on RateCity was:

• 4.47 per cent for owner-occupiers
• 4.91 per cent for investors

Meanwhile, average fixed rates for owner-occupiers were:

• 4.21 per cent for 1 year
• 4.16 per cent for 2 years
• 4.23 per cent for 3 years

For investors, the averages were:

• 4.53 per cent for 1 year
• 4.48 per cent for 2 years
• 4.56 per cent for 3 years

But while one-year, two-year and three-year fixed rates were cheaper than variable rates, four-year and five-year fixed rates were more expensive, according to the data.

At the end of January, average fixed rates for owner-occupiers were:

• 4.60 per cent for 4 years
• 4.65 per cent for 5 years

For investors, the averages were:

• 4.89 per cent for 4 years
• 4.97 per cent for 5 years

Cheapest variable-rate mortgages on the market

Focusing just on the variable-rate home loans listed on RateCity, it’s still possible to get a mortgage for an historically low rate.

At the end of January, the cheapest rate for owner-occupiers was:

• Reduce Home Loans’ Rate Buster Standard Home Loan at 3.39 per cent (comparison rate 3.39 per cent)

The cheapest rate for investors was:

• Reduce Home Loans’ Rate Buster Investor Wealth Maximizer at 3.69 per cent (comparison rate 3.69 per cent)

It’s important to note that the cheapest home loan isn’t always the best – for some borrowers, a mortgage with a higher rate will be a more suitable option.

Compare home loans in Australia