As the RBA has brought the cash rate down to historically low levels, mortgage-holders have a decision to make.

The age old question of whether they should fix these low rates or leave them as is, would be foremost in the minds of home owners.

Analysis by financial comparison site Mozo has found two year fixed home loan rates are continuing to fall and are now 82 basis points below variable rates on average as banks compete to lockdown customers.

At a Glance:

• To date the best two year fixed rate is 2.09 per cent through ING, with the average rate at 2.67 per cent
• Average two year fixed rates are 82 basis point below the average variable rate & 100 basis points below the big four’s average variable rate
• The best variable home loan rate is 2.29 per cent through Reduce Home Loans, with the average rate at 3.44 per cent
• Top big bank’s variable home loan rate 2.72 per cent through ANZ, with the average 3.67 per cent

Mozo has seen many of their customers lock in the two year fixed rate. 

“It’s clear lenders are looking to lock in high quality customers to shore up their loan books,” says Mozo Director Kirsty Lamont. 

”With the RBA signalling low interest rates are going to be around for some time, banks are scrambling to entice customers to fix their rate and stay loyal to their lender. 

“With so many people taking mortgage holidays, it’s clear more lenders will look to cut their fixed rates in a bid to attract and retain borrowers with the capacity to meet ongoing repayments.”

Ms Lamont said fixing your home loan can be a good way to ensure your monthly repayments are predictable. 

"But if you have to break the loan for any reason you might be hit with costly break fees,” said Ms Lamont.

At Joust, Head of Sales Mark Bevan said they are not seeing a noticeable increase in customers seeking fixed rate home loans.  

"Some of the lowest headline rates being advertised are for fixed terms of 2 years and this is likely grabbing the attention of consumers," said Mr Bevan.

"In terms of the best or right time to enter into a fixed rate home loan, consumers should consider their own personal financial circumstances.  

"If we follow recent statements of the RBA Governor, he is indicating that it will be a considerable time before there is a prospect of interest rates moving up."

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