New 4.94% fixed rate home loan

Newcastle-based Greater Bank has announced a new 4.94% p.a. rate fixed for two or three years (7.07% p.a. comparison rate - 2 years; 6.88% p.a. comparison rate* - 3 years) for owner occupiers with 80% loan-to-value ratio (LVR) taking up its Ultimate home loan.

It's a drop of five basis points off the old rate which had matched a handful of lenders on the market offering under 5.00% p.a. on fixed home loans, generally for two or three years.

Fixed home loan rates have been on the slide since mid-2024 as the home lending market prepared for imminent cuts to the cash rate - even though they may have come a little later than some anticipated.

See also: Fixed rate home loans: Benefits and Drawbacks

Greater Bank has form in offering market-low interest rates, previously offering a memorable low fixed rate of 1.59% p.a. (2.10% p.a. comparison rate*) in September 2021 as rates languished during the pandemic.

At the time, it wasn't too much more than the official cash rate at its record low of 0.10%, and was the lowest rate ever observed in the InfoChoice Group database.

Like that home loan deal, Greater's new fixed-rate deal is only available to borrowers from New South Wales, the ACT, or Queensland.  

Are borrowers taking up fixed rate home loans?

Despite the relatively attractive fixed rates on offer, the last lending data that measured the breakdown of new fixed to variable rate loans showed borrowers overwhelmingly preferred to ride the forecast downhill run in variable interest rates.

At the end of last year, the take-up of fixed home loans was under the 2% mark of total new home lending with that data no longer published by the Australian Bureau of Statistics.

Greater Bank's 4.94% p.a. is one of the lowest on the YourMortgage.com.au database outside of specialist 'green' home loans where the federal government's Clean Energy Finance Corporation provides discounted finance through participating lenders.

Greater's Ultimate home loan product is a packaged home loan with an ongoing annual fee of $395.

It permits multiple linked offset accounts but only when the loan reverts to a variable interest rate.

Greater Bank also offers a cashback deal of up to $3,000 to eligible new lenders and up to $2,500 for eligible refinancers.

See also: Home Loan Cashback and Refinance Offers

Is the time right to take out a fixed-rate home loan?

The Reserve Bank of Australia's monetary policy board is due to meet 11-12 August for what is shaping up to be one of the most hotly tipped cuts to the cash rate in recent history.

The cash rate is currently 3.85% and is expected to be cut by at least 25 basis points to 3.65%.

But on Monday, markets had priced in a 51% chance of a 50-basis point cut to the cash rate to 3.35%.

The RBA has not made a 50-basis point cut to the cash rate since May 2012.

Borrowers generally prefer variable-rate home loans in environments with falling interest rates, some choosing to lock in to fixed rates when the cash rate is low or expected to go higher.

This happened during the pandemic as the cash rate plunged to its record lows.

In June 2020, more than a third of new home loan commitments were fixed-rate loans, increasing to nearly half by mid-2021.

Image by Ketut Subiyanto via Pexels

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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Important Information and Comparison Rate Warning