Australia’s major banks have begun to lower their fixed home loan interest rates, with some rates now falling below 6%.

However, recent figures from the Australian Bureau of Statistics reveal that only 1.9% of borrowers opted for a fixed interest rate in July.

Jonathan Preston, a senior mortgage broker at Homeloanexperts.com.au, predicts that fixed rates could drop even further, potentially reaching as low as 4%. He anticipates that variable rates will take longer to decline to similar levels.

According to Alan Hemmings, CEO of Homeloanexperts.com.au, the decrease in fixed rates suggests that banks expect the Reserve Bank of Australia (RBA) to implement future cash rate cuts.

“Fixed rates typically reflect market expectations for the cash rate and variable rates, although they may not always predict timing accurately,” he explains.

Hemmings adds that most lenders are adjusting their medium-term fixed rates—specifically two- and three-year terms—indicating they aim to secure clients at higher rates before the market eventually shifts.