With a fixed rate home loan, your rate doesn't change during the fixed period. After the fixed period ends, the loan reverts to a variable rate loan. With a variable interest rate, your lender can change your interest rate at any time.
Most Australian lenders let borrowers fix their rate for a period between 1 and 5 years.
If you want to fix your rate for a longer period, check out our guides on:
There was a time recently where the lowest interest rates on the market were 1- and 2-year fixed rate loans. But this was a strange moment where interest rates across the board were at record lows.
Interest rates rose several times in 2022 and 2023 off the back of high inflation and the Reserve Bank (RBA) raising rates in response. And anyone looking to fix their rate today is definitely going to be on a higher rate than if they'd stuck with a variable one.
Most of the time, a variable rate loan is going to be lower than a fixed rate loan. While some borrowers managed to lock in very low fixed rates, that time has now passed.
Comparing 1-year fixed rate home loans is no different than comparing another mortgage type.
Focus on the following:
Even if you're not fixing entirely to get the lowest rate, when comparing 1-year fixed rates you should look for a lower rate among those products. It means your repayments will be lower.
Some loans have an application fee, a settlement fee or even a monthly account fee. Some loans have almost no fees.
Obviously the less you have to pay in fees, the better.
Fixed rate loans are often less flexible than variable loans. They are less likely to have offset accounts or let you make extra repayments. But some do, so it's worth comparing.
But even if a 1-year fixed rate lacks these features, you'll be on a variable rate in 12 months. Then the loan will likely give you more repayment options.
Most lenders offer both fixed and variable rate loans across most of their product range. Owner-occupiers and investors both have plenty of options if they want to lock in a fixed rate.
While it is true that there are more options out there for variable rate borrowers, it's still possible to find more unique fixed rate products like:
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