What is fixed-rate home loan?

A fixed-rate home loan agrees an interest rate that doesn't change for a chosen term, commonly 1, 2, 3 or 5 years. Your repayment is identical month-after-month for the term, regardless of what the RBA cash rate does in the meantime.

Trade-offs: extra repayments are usually capped (commonly $10,000-$30,000 per year above the schedule), break costs apply if you exit before the term ends, and offset accounts are often unavailable or restricted on fixed products.

At the end of the fixed term the loan reverts to the lender's standard variable rate, which can be materially higher than the fixed rate. Borrowers should diary the rollover date well in advance to negotiate a new fixed period or refinance.

fixed rate · fixed home loan · fixed mortgage