Fixed-rate home loans offer repayment certainty. The rates available can vary depending on the lender, loan term, and your borrowing situation. Below, you’ll find our most competitive fixed home loan interest rates for 1, 3, and 5-year terms. These are updated regularly, so you can lock in a great rate with confidence.

What Is A Fixed-Rate Home Loan?

A fixed-rate home loan is a type of mortgage where the interest rate is locked in for a specified period, typically from 1 to 5 years, although some lenders offer terms of up to 10 years.

During this period, your repayments will stay the same, no matter what happens with interest rates in the market. Once this fixed period ends, your loan reverts to the standard variable rate of your lender, which may be higher or lower, based on market conditions. At that point, you can refix at the rates available at that time, switch to a more competitive variable rate, or refinance with another lender.

Fixed-rate loans must be chosen particularly carefully because you are committed to that lender for the period or you’ll have to pay break costs.

Example of how a fixed-rate home loan works

Let’s say you borrow $500,000 over 30 years with a fixed interest rate of 5.40% for three years.

During those three years, your monthly repayments stay at around $2,808, regardless of any market changes.

After three years, your fixed term ends and your loan switches to your lender’s standard variable rate. If that new rate is 6.50%, your monthly repayments could jump to about $3160. This is a difference of over $350 each month.

This example shows how fixed-rate loans offer repayment certainty for a set period, but also how important it is to plan ahead for the potential jump in repayments once the fixed term ends.

Key Things To Know About Fixed-Rate Home Loans

• You choose your fixed term (typically 1, 3, or 5 years) during the application process. Each term comes with different interest rates.
• Some lenders offer a rate-lock option, which secures your rate between application and settlement, protecting you from any rate rises during that period. The rate-lock fee typically ranges from $395 to $695, or 0.15% of your loan amount. Ask your broker to explain how rate-lock works and whether it makes sense for your circumstances.
• Extra repayments are typically capped, and break costs may apply if you pay off or refinance your loan during the fixed period.

What Are The Pros And Cons Of Fixed-Rate Home Loans

Pros

• Your repayments stay the same for the entire fixed term, giving you protection from interest-rate hikes.
• Fixed-rate loans offer predictability, even during economic fluctuations.
• Stable repayments make it easier to budget and plan for long-term financial goals.
• Locking in a fixed rate can protect cash flow and yield for investors.

Cons

• Fixed-rate loans often come with restrictions, such as penalties for early repayment or break fees for switching loans before the fixed period ends.
• You could miss out on savings if interest rates drop while your rate is fixed.
• Fixed-rate loans can initially be higher than variable-rate loans, meaning you might pay more if interest rates stay the same or decrease.
• Most fixed loans restrict extra repayments, redraws or offset accounts.
• When the fixed period ends, your loan typically changes to your revert rate – a variable rate the lender determines – which might be higher. You will need to reassess your financial situation and possibly renegotiate your loan terms. Contact your mortgage broker immediately so they can reprice the rates and ensure you remain competitive.

Who Should Consider A Fixed Rate?

Fixed-rate home loans aren’t for everyone. For the right borrower, however, they can offer much-needed stability and peace of mind. Here are the profiles most likely to benefit:

First-Home Buyers

Buying your first home is exciting, but it can also be financially overwhelming. A fixed rate gives you certainty in your monthly repayments, which can make budgeting and managing your cashflow much easier during those crucial early years. Many first-home buyers like the idea of setting and forgetting their repayments. Fixed-rate loans help you plan ahead while you settle into your new financial responsibilities.

Budget-Conscious Borrowers

If your priority is predictability, not just the lowest possible interest rate, fixed-rate loans are a smart choice. Knowing your repayments won’t change for 1–5 years means fewer surprises and less stress, especially if you’re living on a tight or fixed income.

Property Investors

Investors often use fixed-rate loans to ensure their loan repayments won’t exceed rental income, even if rates rise. This helps maintain healthy cashflow and reduces the risk of negative gearing outcomes getting worse due to rising costs.

Is a fixed-rate right for You?

Ask yourself:

• Do you need repayment certainty over the next few years?
• Would it stress your budget if rates rise by 1-2%?
• Are you unlikely to sell or refinance within the fixed term?
• Are you happy to trade off flexibility for financial stability?

If you answered yes to most of the above, a fixed-rate loan could be the right move. Just be aware of break costs, limits on extra repayments, and the features your fixed product does (or doesn’t) include, such as offset accounts or redraw facilities.

Fixed-Rate Loan Eligibility

Fixed-rate home loans are available to a wide range of borrowers. Unlike specialised loan types (like low-doc or guarantor loans), most lenders offer fixed-rate options as a standard choice.

Here are the requirements lenders look for when assessing for fixed-rate home loans:

• You must be at least 18 years old.
• You have stable employment or a consistent income stream.
• Your credit history shows responsible borrowing and repayments.
• You’ve saved a deposit of 5-20% (or have enough equity if refinancing).
• Your debts are manageable and don’t hurt your borrowing power too much.
• You meet the lender’s minimum income, loan size, and fixed-term requirements.

Want to understand what really affects your approval chances? Check out these 7 factors that affect your home loan eligibility.