Fixed Rates Hit 6% as Lenders Pass on September RBA Rise
Forty lenders including all four major banks have passed on the September RBA rise — and fixed rates have officially crossed the 6% mark for the first time.
The September interest rate decision has now worked its way through the mortgage market. Forty lenders — including all four major banks and their subsidiary brands — have passed on the Reserve Bank's September cash rate rise, with many borrowers now paying rates above 7% on their home loans.
MPA Australia reports that lenders lifted 375 owner-occupier and investor variable rates by an average of 0.25 percentage points. Only three lenders moved in the other direction, trimming six variable rates by an average of 0.10 percentage points.
Following the broad repricing, the average variable rate for owner-occupiers paying principal and interest now sits at 6.75%.
Fixed Rates Have Cleared the 6% Mark
The repricing hasn't been limited to variable loans. Twenty-one lenders raised 510 owner-occupier and investor fixed rates by an average of 0.21 percentage points in the past week alone.
Fixed rates starting with a "5" have officially disappeared from the market. MPA Australia confirmed this week that the last of the lenders moved their fixed rates above 6% — a threshold that closes off an option many borrowers had relied on for repayment certainty.
Beyond the headline number, the movement carries a signal. Fixed rates typically move ahead of official cash rate decisions as lenders price forward-looking expectations into them. The volume of fixed-rate increases has been described as "a troubling sign considering banks tend to move fixed rates ahead of an RBA hike, not following" — meaning lenders may be positioning for further official rate rises ahead.
The repricing has reshaped the competitive landscape. More than 90% of lenders now offer their cheapest rate on a variable product, with the gap between each lender's lowest fixed and variable rates averaging 0.34 percentage points. Borrowers chasing certainty through a fixed deal are paying a meaningful premium for it.
What Borrowers Should Do Right Now
For borrowers on a standard variable rate, the September increase means higher monthly repayments — and a clear reason to review.
The lowest variable rate available at any loan-to-value ratio currently sits at 5.69%, the only rate below 5.75%, according to MPA Australia reporting. Industry analysts expect that floor to rise to 5.94% once every lender completes their pass-on. That still leaves a gap of approximately 0.81 percentage points between the cheapest option and the market average — a spread that translates to thousands of dollars a year on a typical loan.
Start by comparing the cheapest home loans on the market to understand the current rate floor. Then use a refinance savings calculator to model what a rate reduction would mean on your specific balance and remaining term. A 1.00% rate reduction on a $600,000 loan can save approximately $6,000 per year before tax — a figure worth knowing before you decide whether to act.
Not every borrower is in a position to switch. Those with more complex financial arrangements, or whose current equity position limits their options, may find the path to a lower rate is not straightforward. Industry analysts quoted by MPA Australia described the environment as "difficult medicine to swallow for borrowers on behalf of a high inflation nation."
If you are considering refinancing, factor in discharge fees, application costs, and any break costs on fixed-rate periods before assuming a lower headline rate will save money net. In most cases, a switch still makes sense — but the numbers need to work on your specific loan.
One upside to note: depositors are benefiting from the same rate environment. Some savings accounts now offer 6.00% or more for those who meet the applicable conditions. Borrowers who maintain a strong offset balance are also partially countering the rate rises through reduced interest charges on their loan principal.
The Bigger Picture: Four Rises in Series
This September rise was the fourth in a series of RBA rate increases. The cumulative effect has been a market where average owner-occupier variable rates have climbed well above 6%, and sub-6% fixed options have entirely disappeared.
For anyone who hasn't compared their rate recently, use a repayment calculator to understand exactly what your current rate is costing each month — and what a lower rate would mean for your cashflow. Understanding your exposure is the foundation for any decision about whether to stay put, negotiate with your existing lender, or test the refinance market.
A borrower sitting on the 6.75% average who can access a rate of 5.94% is paying a significant premium. In the current environment, that premium compounds — and is worth reviewing.
Read the full repricing analysis at MPA Australia.