Fixed Interest Rate Home Loan

Key features

Fixed rate home loans are priced according to a pre-determined interest rate, which is independent of fluctuations in the official cash rate. You can fix your entire loan for a period of between one and five years, or you can fix a certain portion and leave the rest variable. When the fixed term expires, the fixed portion will generally revert to the prevailing variable interest rate.

Advantages

If you are worried that interest rates may rise in the next few years, locking in an interest rate by fixing a portion of your home loan is an insurance policy against rising repayments. At present, fixed rates are almost on par with variable rates. Although there is normally a fee charged for fixing a loan, the added certainty fixing brings makes fixed rate home loans attractive.

Considerations

Besides a fee for setting up a split loan with fixed and variable portions, you will be charged if you choose to leave the fixed term before it expires. Fixed rates have been criticised due to their lack of flexibility: few features, fees charged for transactions such as redraw and lump sum repayments. Fortunately, this is changing but check with prospective lenders to make sure the fixed product contains the features you require. While you will be insulated from rate rises, you won't benefit if rates drop during the fixed term.

Suitable for

Anyone who is concerned that interest rates may rise in the near term.

In the current climate of sky-high oil prices pushing up inflation, fixing at least a portion of your loan is a sensible strategy.

1-year term

Fixed Interest Home Loans

Based on a one-year fixed term

Institution	Actual Rate	Comparison Rate *	Institution	Actual Rate	Comparison Rate *
	6.99%	7.77%		7.14%	7.81%
	7.04%	7.33%		7.14%	7.81%
	7.29%	7.83%		7.09%	7.86%
	7.33%	7.33%		7.19%	7.92%

2-year term

Fixed Interest Home Loans

Based on a two-year fixed term

Institution	Actual Rate	Comparison Rate *	Institution	Actual Rate	Comparison Rate *
	7.24%	7.75%		7.34%	7.79%
	7.19%	7.75%		7.34%	7.79%
	7.44%	7.82%		7.29%	7.83%
	7.43%	7.43%		7.44%	7.90%

3-year term

Fixed Interest Home Loans

Based on a three-year fixed term

Institution	Actual Rate	Comparison Rate *	Institution	Actual Rate	Comparison Rate *
	7.34%	7.62%		7.44%	7.78%
	7.20%	7.74%		7.44%	7.78%
	7.44%	7.80%		7.39%	7.81%
	7.59%	7.59%		7.49%	7.88%

5-year term

Fixed Interest Home Loans

Based on a five-year fixed term

Institution	Actual Rate	Comparison Rate *	Institution	Actual Rate	Comparison Rate *
	7.74%	7.86%		7.94%	7.93%
	7.89%	8.05%		7.94%	7.93%
	7.74%	7.90%		7.79%	7.93%
	8.04%	8.04%		7.89%	8.00%

* Comparison rates are based on a loan amount of $300,000 over a 30 year term. Comparison rate schedules are available via each lender’s website or by contacting Compare-Homeloans. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates are effective as of 11-01-2011.

All information provided is a guide only and may not be complete for your purposes. Whilst displayed rates are regularly updated, neither Compare-Homeloans nor the Providers warrants the accuracy of any information and you should confirm it with the Provider before acting on it. Except for responsibilities implied by law which cannot be excluded, neither Compare-Homeloans nor the Provider is responsible for any loss, damage, cost or expense incurred by you as a result of any error, omission, or misrepresentation in relation to the data herein.