Variable or fixed? Finding your home loan rate in 2025.

The Reserve Bank of Australia (RBA) has cut the cash rate, and more cuts are expected in 2025. All big four banks anticipate at least two cuts this year, with some predicting up to five reductions.

So, should borrowers choose a variable home loan rate, a fixed one, or a split rate? The answer depends on your priorities.

Understanding your options

Variable home loans

A variable home loan rate moves up and down with market interest rates. If the RBA cuts the cash rate again in 2025, your lender may reduce your interest rate, leading to lower repayments. However, if the RBA raises the cash rate, your interest rate could increase.

Variable home loans often offer more flexibility and features than fixed-rate loans, such as redraw facilities and offset accounts. You may also make extra repayments without fees, helping you pay off your loan sooner.

Fixed home loans

A fixed-rate home loan keeps your interest rate constant for a set period (usually one to five years), regardless of market changes. This allows you to budget with certainty, knowing your repayments won't change.

If the RBA raises the cash rate, your fixed rate remains unaffected, but you won't benefit from any rate cuts. Fixed-rate loans have become more flexible, with some lenders allowing extra repayments up to a limit and offering redraw facilities or offset accounts.

However, selling the property or refinancing may incur break fees, which can be substantial. It's essential to consider your long-term plans before committing to a fixed-rate loan.

Split rate home loans

A split rate home loan combines both fixed and variable rates. This option provides the certainty of fixed repayments for part of the loan and the flexibility of variable rates for the rest, allowing you to benefit from potential interest rate cuts.

Explore your options with FinancePath

Deciding on the right loan type can be challenging, but FinancePath is here to help. We can analyse your situation and help you weigh your options. With access to exclusive variable and fixed-rate loan options with competitive rates and features, we're ready to assist you.

Contact us today to find the best home loan for your needs. Book a 10-minute chat with us or dial 1300 780 440.