If you are looking for a home loan and find the certainty and consistency of a fixed rate appealing, you might be interested in the results of Canstar Fixed Rate Home Loans.
Interest rates are as low as they’ve ever been for Australians, and it’s unclear how long rates will stay as low as they are now – some economists say the Reserve Bank of Australia (RBA) may not increase the cash rate again until 2024, while others are leaning towards it rising again from early 2022.
With interest rates set to stay low for at least the immediate future, it may be time to lock in a low fixed rate on your home loan. A fixed rate home loan is a loan in which the interest you repay is fixed or “fixed” for a certain period of time, which will generally be between one and five years, depending on your lender and your own preferences.
The main advantage of these types of loans is certainty. Interest rates can go up or down at any time, but if you set a fixed rate, you’re guaranteed that your repayments will stay the same month-to-month no matter what. In these uncertain times, it can be good to know that your payments will stay consistent.
If you are considering a fixed rate home loan, Canstar looked at 75 providers in our database to find the ones that offer exceptional value to clients.
How are mortgage lenders rated?
Canstar Fixed Rate Home Loan Attribution uses a methodology that compares mortgage providers based on the performance of their fixed rate products in our star rating of home loans.
Providers in each category are assessed according to two consumer profiles (owner-occupier and investor) and five fixed-rate terms (one, two, three, four and five years). The Canstar Fixed Rate Home Loan Award is presented to providers who offer consumers the strongest combination of products for these variables.
This year, Canstar recognized award-winning lenders in three categories: banks, client-owned banks and non-banks. The category of customer-owned banks recognizes providers such as mutual banks, credit unions, and building societies, while non-banks recognize lenders that are not authorized deposit institutions.
Each provider is assigned separate ratings for their pricing and mortgage characteristics. The price score is determined by calculating the total cost of a home loan of $ 350,000 with a loan-to-value ratio (LVR) of 80%, comprising:
- interest charges (based on the historical six-month average rate available for the product)
- initial, ongoing and discharge fees (e.g. administration fees, monthly account maintenance fees, etc.)
- at least one rollover (extension) of the fixed rate period, including costs incurred
- 60 days interest charge after product is returned at a standard variable rate
The feature score is determined by taking into account more than 170 product features across six categories, which correlate with the customer’s journey through the life of the loan. These categories, and some of the considerations, include:
- Research: What information is available online from the provider regarding their mortgage loans?
- Application: what application channels are available? Does the supplier offer pre-approval? What types of security will the vendor accept?
- Management: What are the reimbursement options available? Does the provider offer a clearing account or buyout facility on their home loans? Does the supplier offer online self-service facilities?
- Variation: What options does the provider offer to split or change their mortgage loans? Can you keep the same mortgage if you move?
- Support: what are the customer support facilities offered by the supplier?
- Receipt: is it easy to close the mortgage? Are the discharge fees waived if the loan ends?
Who are the 2021 laureates?
UBank retained its position as Bank of the Year in Canstar Fixed Rate Home Loan Awards, while Greater Bank and Tic: Toc are award winners in the Customer-Owned Bank and Non-bank categories respectively.
Bank of the Year – Fixed Rate Home Loan – UBank
UBank won the Bank of the Year award for 2021 and its performance continues to be strong in all categories considered. While they don’t offer fixed two- or four-year home loans, UBank tops the remaining three terms for homeowners and investors.
UBank received a 5-star rating in all consumer profiles considered in our research, demonstrating its strength as a fixed rate lender. A remarkable example was seen when we considered a one-year fixed term loan for principal and interest, for which UBank offers rates as low as 1.79% (comparison rate 2.32%) at the time. of the editorial staff.
Bank owned by client of the year – Fixed rate mortgage – Large bank
Greater Bank won the Customer Owned Bank Award in 2021 and is particularly successful in fixed rate lending. For homeowners looking for a low one to three year rate and investors looking for a low one to two year rate, the Greater Bank is one of the best performing, with rates below. 2% in all of these categories at the time of writing. .
Greater Bank is also the market leader in this category for five-year fixed rate home loans.
Non-bank of the year – Fixed rate mortgage – Tic: Toc
Tic: Toc’s still strong performance saw it win the Non-Bank of the Year award in 2021, after taking second place last year. Tic: Toc offers competitive one to three year home loans and has an average historical interest rate of less than 1.9% on fixed terms of one and two years.
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