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Australia’s lowest fixed rate of 1.59% is now gone: what’s in store for 2022?

Australia’s lowest fixed rate of 1.59% is now gone: what’s in store for 2022?

The lowest fixed home loan rate on record has hiked today, ending an era for ultra-low rates.

Greater Bank has lifted its 1-year rate from 1.59 per cent to 1.89 per cent for owner-occupiers paying principal and interest. The new lowest fixed rate in the market is now 1.79 per cent available from UBank, Qudos Bank and RACQ for 1 year.

Greater Bank is not the only lender hiking fixed rates. The RateCity.com.au database shows more than half of all lenders have hiked at least one fixed rate in the past two months, including all four big banks.

As a result, there are now just 41 fixed rates under 2 per cent, with that number expected to fall to zero, or close to zero, within the next six months.

Lenders that have moved at least one rate in the last 2 months

Rate typeLenders that have cutLenders that have hiked
1yr fixed

20

52 

2yr fixed

7

65 

3yr fixed

1

75 

4yr fixed

1

44 

5yr fixed

2

63 

Variable

47

Source: RateCity.com.au. Note some lenders have moved more than one rate. Date range is from 12 November 2021 to 11 January 2022.

Home loan rates under 2%

Rate typeNumber of rates under 2%
1yr fixed

26

2yr fixed

14

3yr fixed

1

4yr fixed

0

5yr fixed

0

Variable

72

Source: RateCity.com.au.

Loans under 2% Jan 2022

Source: RateCity.com.au.

Sally Tindall, research director at RateCity.com.au, said: “Today’s hike from Greater Bank marks the end of an era for record-low fixed rates. We are unlikely to see another fixed rate of 1.59 per cent for years, if ever.”

“At the beginning of 2021, there were 117 fixed rates under 2 per cent. This number peaked in April at around 180 but has plummeted in the last couple of months. While there are still 41 fixed rates under 2 per cent, the list is shrinking quickly. We expect the majority of these to be gone within the next six months,” she said.

“Banks are still trimming variable rates, but the cuts have largely been to their basic loans and almost always reserved for new customers.

“While we expect more cuts to variable rates in the next few months, we could see some lenders hike later this year ahead of the RBA, if the cost of funding continues to escalate,” she said.

Lowest owner-occupiers rates on RateCity.com.au

LenderAdvertised rate
1yr fixedQudos Bank, RACQ, UBank1.79%
2yr fixedHSBC1.88%
3yr fixedAustralian Mutual Bank1.98%
4yr fixedBankVic2.39%
5yr fixedBankVic2.49%
VariableReduce Home Loans1.77%

Source: RateCity.com.au. Note Rates are for owner-occupiers paying principal and interest, LVR requirements apply for some loans.

Lowest big four bank owner-occupier home loan rates

CBAWestpacNAB ANZ
1yr fixed

2.54%

2.34%

2.54%

2.39%

2yr fixed

2.69%

2.49%

2.69%

2.59%

3yr fixed

3.14%

2.89%

3.14%

2.99%

4yr fixed

3.34%

3.19%

3.34%

3.39%

5yr fixed

3.59%

3.39%

3.59%

3.59%

Variable

2.29%

2.19%

2.29%

2.29%

Source: RateCity.com.au. Note Rates are for owner-occupiers paying principal and interest, LVR requirements apply for some loans.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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