Watch out for the fixed rate home loan rort.

Borrowers are being warned by one of Australia’s biggest comparison websites, of fixed home loan interest rate rorts that can end up costing thousands of dollars extra in high interest charges.

According to the new findings by, many fixed rate home loans – which are the most popular term among borrowers – have attractively low rates but after the fixed period ends they are reverting up to 1.01 percentage points higher.

The average three-year fixed rate is currently 5.07 percent and reverting to 5.51 percent after the fixed period ends, according to’s database. But there are several three-year fixed loans that revert higher than this, by up to 6.19 percent, including all four of the major banks.

Compared to July 2011, before fixed loans began to fall, the average three-year fixed rate (7.38 percent) was almost the same as the average revert rate (7.41 percent). Revert rates for three-year fixed home loans ranged up to 0.70 percentage points higher.

Three-year fixed rates and their revert rates

Three-year fixed rates and their revert rates

The findings come as more borrowers choose to fix, with the latest (original) data from the Australian Bureau of Statistics (ABS) crunched by showing 92,251 fixed home loans were financed in the past 12 months to August 2013 – which was 29,122 more than the previous year.

The proportion of borrowers fixing out of all loans financed was 16 percent on average for the past year, compared to 12 percent the year prior.

Spokesperson of Michelle Hutchison, said borrowers need to be wary of attractive fixed loan offers as more borrowers are expected to lock in their rates.

“Fixed loans are great for certainty that your repayments will remain the same during the fixed term, particularly when there’s talk of rising interest rates on the horizon following the latest inflation figures.

“And there are some very good value deals currently being offered, with three-year fixed rates starting from 4.69 percent on But low fixed rate loans are not necessarily the best value over a 30-year loan term if the revert rate is much higher.[sam id=34 codes=’true’]

“For instance, let’s take a typical $300,000 mortgage over 30 years with the average three-year fixed home loan of 5.07 percent reverting to 5.51 percent. The extra cost after the fixed period would be about $81 per month. Over the remaining loan term of 27 years following the fixed period, this extra cost is potentially over $26,000.

“The best way to avoid being ripped off with a fixed home loan is by comparing home loans before your fixed term ends and renegotiate with your lender or switch to a better deal. If you fixed at the average three-year fixed rate of 5.07 percent and switched after three years to one of the lowest variable rates available – currently 4.59 percent – that’s $168 less in monthly repayments compared to the average revert rate of 5.51 percent. Over the remaining loan term that’s a saving of over $54,000.”



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit

'Watch out for the fixed rate home loan rort.' have 2 comments


    October 27, 2013 Jason

    Am I missing something here? When a fixed-rate term expires the interest rate reverts to the bank’s standard variable rate does it not? Whilst it’s true that the big 4 published rates are currently around 6.19%, the majority offer discounts in the order of 0.7%-0.8% bringing it down to a ‘revert’ rate of around 5.39%-5.49%. There are annual package fees involved but all loan providers charge the same fees. The fact is you’ll probably find that the 4.59% rate touted in the above article actually equates to around 5.2% once all fees and charges are taken into account. If you find that the variable revert rate you are paying is comparatively higher than others, then you have the freedom to switch lenders without penalty by virtue of the fact that it is now a variable-rate loan.

    I normally don’t comment on advertising threads like this, but when mortgage-broker spokespeople like Michelle Hutchinson say that there is a high risk of “interest rates rising should the United States raise its debt ceiling” like she did a couple of weeks ago, I suspect these people are passing public comment on macro-economic and financial issues that they don’t really understand, albeit in an effort to scare customers to their website. Whilst I have no issues with informative advertising, it’d be even better if the information was actually researched and quoted instead of speculative and unsubstantiated hype.


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