February home loan snapshot: House prices have a hot girl summer

Key Points

  • The RBA won’t hike in February.
  • Fixed interest rate home loans have begun to drop.
  • Property prices are heating up again.

Reading the property market is like reading tea leaves. But perhaps the leaves are onto something this month. Things seem to have shifted.

Most property experts and economists agree the Reserve Bank of Australia (RBA) is done hiking interest rates for this cycle. Inflation has slowed down (or has increased less quickly), so the RBA is most likely gearing up for an extended interest rate hold. 

Cuts could also be on the forecast for later this year, but this is us reading tea leaves. The timing could shift depending on the economy. 

“No new rate hikes in 2024”, at least, is excellent news for home buyers and homeowners alike. No hikes mean no increases to home loan repayments, which means greater affordability – right? 

Let’s get into what borrowers and home buyers need to know in our February home loan snapshot.

Australian property prices are heating up

Home values are once more on the upswing into February, reports CoreLogic, but the price increases aren’t felt equally across Australia’s capital cities.

Notably, Melbourne (-0.1%), Hobart (-0.7%), and Canberra (-0.2%) posted marginal declines in CoreLogic’s monthly home values index. It’s a summer slump – but barely. 

The national average, however, clocked in at +0.4% growth in January, up from the +0.3% increases in November and December. 

The research firm has consistently flagged 2024 as one to watch for home value growth, and despite the odds stacked against home buyers, high migration and the hellish rental market have kept housing demand tight. 

“Realistically, I don’t think the housing market will cool off,” says Mozo property expert Peter Marshall. 

“Home value growth will be slower in most capital cities thanks to high interest rates, but intense buyer competition still drives property prices. I just don’t see any meaningful way the housing market will slow down – for some years, now.”

The average mortgage is well over $600k in Australia now, and it’s worth remembering that the bulk of your mortgage repayments isn’t interest: it’s principal. (Unless you’ve gone interest-only, of course). 

So, while waiting for rate cuts to buy is all well and good, consider how rising house prices affect your finances. An extra 0.5% on your 6.00% interest rate can be an extra few hundred dollars per month in mortgage repayments. A 5% increase ($30,000) in your principal adds slightly more.

Principal
Interest rate
Monthly repayment
Added costs
$600,000
6.00%
$3,866

$600,000
6.50%
$4,051
$185
$630,000
6.00%
$4,059
$193

Figures calculated for a principal & interest home loan with a 25-year term.

You can crunch the numbers yourself using Mozo’s free mortgage repayments calculator.

Mortgage lenders still increasing rates, despite the RBA hold

The RBA didn’t meet in January, and most experts agree the RBA will continue to hold the cash rate at 4.35% in February. Yet despite no official pressure to raise variable rates, many lenders have passed along increases to customers anyway. 

Cashback offers for refinancers have also escaped the market – another 4 have disappeared. A moment of silence for these perks, please.

To be fair, however, a few home loan lenders have slashed variable rates, leaving some balance. After all, the average variable rate for owner-occupied properties hasn’t shifted in the Mozo database in two months: it’s still 6.85% p.a.

But if you’re looking for a sleek home loan interest rate, the market hasn’t turned in your favour just yet. Let’s run through some noteworthy rate changes for February.

  • ANZ lifted rates for its Simplicity PLUS basic loan by 10 basis points. 
  • Australian Mutual Bank added 20 bp to most of its variable rates. 
  • ING increased its range of variable options by 5 bp. 
  • Macquarie raised raised 10 bp in December, then slashed them between 9-21 basis points at the end of January, a week ahead of the RBA. 
  • Unloan finally passed along the November rate hike: its loans are now up 25 bp. Up also added 25 bp to its rate (for owner-occupiers only). 

Bankwest lowered its basic option rates by 10 bp.

Fixed rate cuts have begun – barely

Fixed interest rates for home loans have started to decline in the Mozo database. Far more fixed cuts than hikes came through in January, which has inched the averages down for 1 to 5-year terms.

This could be good news for things to come. Fixed rates are inherently predictive since lenders set them based on what official interest rates will do during that time. Falling fixed rates now mean lenders expect rates to start coming down later – so a rate cut this year looks pretty good!

At the time of writing, these are the average fixed rates for owner occupiers with an 80% LVR and a $400,000 loan:

  • 1-year: 6.53% p.a. 
  • 2-year: 6.43% p.a. 
  • 3-year: 6.41% p.a. 
  • 4-year: 6.56% p.a. 
  • 5-year: 6.61% p.a.

Current lowest home loan rates

Here are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database (1 February 2024)^^

Lender
Loan
Variable rate
Pacific Mortgage Group
Standard Variable Home Loan
5.89% p.a. (5.89% p.a. comparison rate*)
The Mutual Bank
Special Budget Home Loan
5.89% p.a. (5.90% p.a. comparison rate*)
Community First Bank
Basic Variable Home Loan
5.94% p.a. (5.99% p.a. comparison rate*)
Greater Bank
Discount Great Rate Home Loan
5.94% p.a. (5.96% p.a. comparison rate*)

Lowest and average fixed rates — Mozo database (1 February 2024)^^

Term
Rate leader
Fixed rate
1-year
Illawarra Credit Union
5.90% p.a. (7.09% p.a. comparison rate*)
2-year
Australian Mutual Bank
5.53% p.a. (6.30% p.a. comparison rate*)
3-year
Australian Mutual Bank
5.48% p.a. (6.24% p.a. comparison rate*)
4-year
HSBC
5.69% p.a. (6.37% p.a. comparison rate*)
5-year
Australian Mutual Bank
5.63% p.a. (6.16% p.a. comparison rate*)

The above are the lowest rates in our database for borrowers with an LVR < 80%. More competitive rates are available for borrowers with lower loan-to-value ratios.

If you’re considering buying property or refinancing your existing mortgage, use Mozo’s home loan comparison table to examine lenders side-by-side, or use our refinance calculator to see how much you could save.

^^Interest rates are based on an owner occupier making principal and interest repayments on a $400,000 loan with an 80% LVR. Check out our dedicated Australian home loan statistics page for more information on average mortgage rates.

Compare home loans - last updated 23 May 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Compare
    Details
  • Discount Variable Home Loan

    Owner Occupier, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a. variable
    6.01% p.a.

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

    Compare
    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

    Compare
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.