Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Lenders put fixed rates on cutting board as demand slows

interest rates ta interest rates ta
Tas Bindi 7 minute read

More lenders have joined the fixed rate cut party amid declining demand.

AMP Bank, IMB Bank, Greater Bank and Credit Union Australia are among the latest lenders to put their fixed rates on the cutting board.

The new fixed rate for AMP’s owner-occupied, principal and interest (P&I) home loans are 3.63 per cent p.a. for two-year and three-year contracts, down from 3.68 per cent p.a. and 3.84 per cent p.a., respectively.

Two-year investment loans have fixed rates of 3.82 per cent p.a. for borrowers paying P&I and 4.04 per cent p.a. for those paying interest only (IO). These mark reductions of 5 and 13 basis points, respectively.


Similarly, the new fixed rates for three-year investment loans are 3.82 per cent p.a. for borrowers paying P&I and 4.04 per cent p.a. for those paying IO. These are down 17 and 15 basis points, respectively.

The non-major bank has also taken its axe to variable rates.

AMP’s reduced variable rate for owner-occupied P&I loans between $500,000 and $750,000 is 3.74 per cent p.a. (down from 3.79 per cent p.a.), while the new rate for owner-occupied IO loans above $750,000 is 4.14 per cent p.a. (down from 4.19 per cent p.a.).

The interest rate for IMB Bank’s Fixed Rate Investment Loans for NSW and ACT borrowers paying IO has also been reduced by 20 basis points to 3.99 per cent p.a. for three years.

The same rate of 3.99 per cent p.a. has been applied to IMB’s Budget Investment Loan for borrowers paying P&I, marking a reduction of 10 basis points.


Greater Bank has similarly slashed fixed rates on its Great Rate Home Loans and Ultimate Home Loans to 3.59 per cent p.a. for two-year and three-year contracts. This represents reductions of five to 15 basis points and applies only to new customers living in NSW, ACT and Queensland.

Credit Union Australia has also joined in on the trend, cutting the rate on its Fixed Rate Investment Loan for borrowers paying IO by 45 basis points to 3.84 per cent p.a.* for two years.

Commenting on the recent rate cuts, Canstar’s finance analyst, Steve Mickenbecker, said: “Recent market action has focused mostly on fixed rate cuts, as funding costs for longer terms has plummeted this year on an outlook for subdued global and domestic growth. This demonstrates the disconnect between fixed home loan rates and the Reserve Bank cash rate.

“While the Reserve Bank has not moved the cash rate, a number of lenders have reduced fixed rates this year. Lenders are getting ahead of the curve.”

Mr Mickenbecker noted the widespread expectation that the Reserve Bank will drop the official cash rate to a new record low, and as such, borrowers might be reluctant to fix a rate at present.

“A Reserve Bank cash rate cut will likely mean some lower variable rates, but not necessarily at the low end of the market where there can be a reliance on wholesale funding, and probably not in fixed rates,” he added.

“Home loan interest rates might not get much better than they are now, and if they do, fixing too soon will be the least of our worries as it will mean a very sad economy.”

He continued: “Canstar’s website lists variable rates as low as 3.44 per cent and a three-year fixed rate just marginally higher at 3.48 per cent. 0.04 per cent is a small premium to pay for the benefit of locking in your repayments for three years at a near record low interest rate.

“Surety of repayment is the virtue of fixed rates.”

While the line of lenders to reduce fixed rates is getting longer, Mortgage Choice’s latest national home loan approval data showed that demand for fixed rates are continuing on their down slide.

Over the month of April, fixed rate home loans accounted for 21.41 per cent of all mortgages written, down 1.23 per cent from the previous month.

Mortgage Choice CEO Susan Mitchell said customer demand for fixed rates could pick up as lenders continue to announce reductions.

“In their continued effort to lure borrowers, major lenders and smaller lenders on our panel have slashed the interest rates on their fixed rate home loans. ANZ announced a reduction to a range of fixed rate home loan rates last week, which follows recent announcements from CBA, NAB and Westpac as well as other lenders on our panel,” she said.

“The good news is fixed rates are well below their long-term average, which means borrowers who are seeking repayment certainty on their home loans will have access to a range of competitive deals if they commit to a fixed term.”

Ms Mitchell noted, however, that average variable rates are “still lower by comparison” and that a cash rate cut by the Reserve Bank could drop the rates further down, “cementing variable loan popularity over the long term”.

“This makes a compelling case for borrowers who may want the best of both worlds and wish to split their home loan into fixed and variable portions,” the CEO said.

Variable rate home loans accounted for 78.59 per cent of all mortgages written in the month of April, according to Mortgage Choice’s data.

Fixed rate demand in April was highest in NSW, with this type of product accounting for 24.66 per cent of loan applications, followed by Queensland (24.42 per cent), South Australia (15.78 per cent), Victoria (15.78 per cent) and Western Australia (12.83 per cent).  

* CUA's interest rate was updated to reflect the correct rate. 

[Related: Major bank broker flows diverge]

Lenders put fixed rates on cutting board as demand slows
interest rates ta
TheAdviser logo

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Work smarter, not harder, in 2022 and beyond, visit the website here to secure your ticket.

interest rates ta
Tas Bindi

Tas Bindi

Tas Bindi is the features editor for The Adviser magazine. 

Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business. 

You can email Tas on: This email address is being protected from spambots. You need JavaScript enabled to view it.



more from the adviser
YBR home loans 850x380 ta

Breaking News

YBR Home Loans flags digital pivot, broker expansion

The major brokerage has launched a digital mortgage broking busin...

stressed woman ta

Breaking News

‘Perfect storm’ of trouble ahead for SMEs

An SME lending company has warned that many retail and supplier b...


Breaking News

Wisr hits high for new loans

The ASX-listed personal lender wrote $132 million in new loans du...