REA Group economist Anne Flaherty
ANALYSIS
Mortgage holders are convinced Australia is in for a rate hike, with a massive surge in the uptake of fixed rate loans imminent, according to a new survey.
Exclusive new data by Money.com.au has revealed a stunning 35 per cent of borrowers are planning to lock in a fixed rate in 2026 to protect themselves from RBA rate hikes.
And many are choosing to fix for two years or longer, in a sign they believe interest rate pain may last longer than expected.
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The survey of more than 1000 Aussies, commissioned from Pureprofile, also revealed that 56 per cent of homeowners planned to keep rates on variable and ride out the uncertainty, but for context, the ‘normal’ level of fixed loans in Australia has been less than 5 per cent of new and refinanced mortgages over the past two years, according to ABS and bank data.
A further 9 per cent plan to split their loan between fixed and variable as a hedge.
Money.com.au mortgage expert Alex Dore said borrowers are suffering heightened rate anxiety in recent times, with the actions of banks not helping.
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“Rate anxiety is creeping back in for homeowners after major banks flagged the risk of further rate increases and as inflation remains above the RBA’s target band of 2-3 per cent,” Mr Dore said. “Many are rushing to fix their home loan to get certainty over their repayments because the rate outlook still feels murky.
Alex Dore said rate anxiety is creeping in for homeowners.
“Banks have already been quietly lifting fixed rates, which suggests they’re pricing in multiple rate hikes in 2026. While there are still some fixed rates lingering in the high fours, those sharper deals won’t be around for much longer.”
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“Traditionally, borrowers rush to fix when rates are at rock-bottom. But the other moment people tend to lock in is when uncertainty peaks, and right now, a lot of homeowners are choosing certainty over their monthly outgoings above anything else.”
Younger borrowers were the demographic most likely to fix, with 61 per cent of Gen Z survey respondents indicating they would lock in a rate this year. Millennials were next at 45 per cent, followed by 28 per cent of Gen X borrowers and just 10 per cent of Baby Boomers.
Crunching the numbers, fixing could make a significant difference to borrowers if the RBA was to indeed raise rates.
By fixing for one year at the lowest rate on offer of 4.99 per cent, a borrower with a $600,000 mortgage on a 25-year loan term could save around $179 a month, adding up to more than $2150 for the year, if the RBA hiked in February and May. This was compared to the current best variable rate of 5.08 per cent.
By fixing for two years at 4.98 per cent, the same borrower could save around $183 a month. This would add up to savings of $2200 in the first year, increasing to $2556 saved in the second year once the full post-hike rate has applied to all 12 months. In total, that’s roughly $4756 saved over the two-year fixed period.
REA Group economist Anne Flaherty said price pressures were sticky.
REA Group economist Anne Flaherty said December inflation above 3 per cent “would suggest price pressures are proving stickier than hoped after only a modest easing in November.”
This would prompt the rate hikes feared by borrowers.
On the flip side she noted that if inflation was to fall within the target range, the RBA would likely “hold fire on raising rates for the time being”.
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