Police Credit Union Drops to 5.79% One-Year Fixed Rate

Police Credit Union has launched a 5.79% p.a. one-year fixed rate as borrowers consider locking in ahead of a likely RBA cash rate decision.

What Police Credit Union Is Offering

Police Credit Union has launched a one-year fixed owner-occupier rate of 5.79% p.a. (6.9% p.a. comparison rate) from 1 September, available to eligible borrowers with a loan-to-value ratio of up to 80%. Australian Broker reports that the lender is positioning the rate as highly competitive for eligible borrowers in its category.

CEO Nick May framed the product around rate risk management rather than simply chasing a low number. "Borrowers can't control the cash rate, and they can't control what happens to variable rates, but they can control how exposed they are to the next rate move," May said.

The timing matters. The RBA meets on 28-29 September, and with futures markets currently pricing around a 70% chance of a hike at that meeting — and a November hike fully priced in — borrowers who fix before those decisions would sit out any increases for the 12-month term. Economists at NAB, ANZ, CBA and Westpac are split on whether September or November will see the next move, but all are currently forecasting at least one further increase before the end of 2026.

Why a One-Year Fix Deserves Serious Consideration Right Now

Fixed rates have traditionally commanded a premium over variable options in exchange for payment certainty. May argued that gap has narrowed at shorter terms: "People often expect that the security of a fixed rate comes with an increased cost — but we encourage people to shop around for a competitive one-year fixed rate to get the certainty without paying a premium for it."

The 12-month term also has a practical appeal at a moment of genuine uncertainty: it avoids the need to forecast where rates will be in three or five years. "Twelve months is a manageable period. You don't need to work out today what interest rates might look like several years from now," May said.

The dollar amounts are real and specific. ABS Lending Indicators for the June quarter put the average new owner-occupier loan at $731,000 nationally. Police Credit Union's own modelling shows a further 0.25 percentage point cash rate increase would add approximately $111 per month — or more than $1,330 per year — to repayments on a loan of that size over a 25-year term. For South Australian borrowers, where the average new loan is $672,000 (up from $598,000 a year earlier, a rise of more than 12%), a further rise would add around $102 a month, or over $1,220 a year.

Locking in at 5.79% for 12 months removes that exposure for the duration of the term — which can provide a meaningful buffer for a household budget already absorbing three cash rate rises since the start of 2026.

The Things You Must Check Before You Fix

May was clear that the product won't suit every borrower, and that candour deserves to be taken seriously.

**Break costs.** Exiting a fixed rate loan early — whether because you sell, refinance, or restructure — typically triggers a break cost. On a large loan, that can run to thousands of dollars depending on movements in wholesale interest rates. Be confident you won't need to exit before the 12-month term ends before committing.

**The revert rate.** When the one-year term expires, the loan reverts to a different rate — likely the lender's standard variable. What that revert rate is matters enormously. A sharp entry rate that rolls onto an uncompetitive variable rate can quickly erode the advantage gained during the fixed period.

**Repayment flexibility.** Many fixed rate loans restrict extra repayments or don't permit offset account access during the fixed term. If you rely on offset facilities or making lump-sum repayments to reduce interest, confirm what the product permits before signing.

**Eligibility.** The 5.79% p.a. rate applies to owner-occupier loans with an LVR of up to 80%. Borrowers with a smaller deposit or a different loan purpose may not qualify.

**What the comparison rate actually means.** The comparison rate of 6.9% p.a. reflects the estimated full cost of the loan — including fees — expressed as an annual percentage. Comparison rates are calculated on a $150,000 loan over 25 years under a legislative formula, so the figure may not accurately represent the cost for larger loans or different terms. It is a useful reference point for comparison, not a direct reflection of your individual cost.

How to Work Out Whether It Makes Sense for You

The right answer depends on your loan size, your timeline, your appetite for uncertainty, and what happens next with rates. There is no universal answer, and fixing is not right for every borrower in every circumstance.

Use the repayment calculator to model your monthly payments at 5.79% versus your current variable rate, and what an extra 0.25 or 0.5 percentage points on a variable rate would cost your budget. Compare what's across the market by reviewing current home loan options — including both variable and fixed alternatives — so you have a full picture before committing to any product.

If you are genuinely uncertain about the right call, speaking with a mortgage broker before the RBA's September meeting puts you in the best position to act with confidence. A broker can model your specific numbers, check eligibility across multiple lenders, and help you weigh the trade-offs — including what the revert rate looks like and whether break cost risk applies to your situation.

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