Home Loan Rates Drop Into the 4s – But With Strings Attached

For the first time in nearly three years, home loan rates starting with a ‘4’ have made a comeback. A growing number of lenders are now offering fixed home loan rates below 5%, marking the first dip since October 2022.

According to Mozo, close to 30 lenders are competing with one- and two-year fixed deals under the 5% mark. This week, Commonwealth Bank entered the fray with a two-year fixed rate at 4.99%—but only for borrowers with a hefty 30% deposit. Westpac followed with an even sharper 4.89% offer on the same terms.

Smaller lenders are also stepping up. BCU Bank currently leads the pack, advertising a one-year fixed home loan rate of 4.65%. Unlike the big banks, it allows borrowers to stretch up to 95% of a property’s value, provided lenders mortgage insurance is included.

While these deals may sound attractive, the trade-off is flexibility. Most sub-5% options are only available to borrowers willing to lock into fixed terms, which could limit freedom if rates shift again.