January home loan snapshot: New Year, new property market?

Key Points

• The RBA doesn’t meet in January, so official interest are on hold this month.
• Most interest rate changes are a New Year’s hangover from 2023.
• Home values grew 8.1% in 2023 nationally – but this wasn’t the case in every city.

Hello 2024, how are you? We’re two days into the New Year and not much has changed in property and home loans since last year – but last year still brings us changes, nonetheless.

For starters, the Reserve Bank of Australia doesn’t meet in January, so home loan interest rates won’t change by much this month. Fallout from last year’s November rate hike may still shake loose some home loan rate changes: we’ll track these as they come in.

The February meeting next month is still live, however, so depending on how inflation fared over the holiday season, we may or may not get another rate hike in 2024.

In the meantime, the average mortgage size you need to buy a new home boomed in 2023, rising a stellar 8.1% across the country, according to CoreLogic. Will this growth continue?

Let’s get into the first monthly home loan snapshot for 2024.

The property market may stay hot in 2024, says CoreLogic, though not quite as hot as last year. 2023 saw spectacular growth across national markets, though not every capital city felt it the same.

Housing markets like Sydney (11%), Perth (13%), and Brisbane (15%) saw the greatest booms: a cocktail of tight supply and high demand fueled competition among buyers.

However, markets like Hobart (-0.8%) and Darwin (-0.1%) saw price falls, so not all cities are created equal. The capital cities were nearly double the price rises in regional Australia, as well. The savvy home buyer might have an opportunity further afield– perhaps for rentvesting .

Individual lenders may make adjustments to their interest rates in January 2024, but on the whole, Mozo expects variable rates to stay roughly where they are.

Special offers like refinance cashback and headline rates may change or even disappear as lenders reassess their financials for the coming year, but these perks aren’t the true value of a mortgage. Home loan costs primarily boil down to long-term rates and the size of your loan amount, so don’t get wooed by honeymoon promises. It’s the heart that matters.

So will interest rates go up in 2024 ? Most likely, though this highly depends on inflation. The RBA is determined to hike interest rates if inflation remains too high, though most Big Banks expect inflation to fall later this year. A hike could be nearer than we think, but so could the first interest rate cut . Stay tuned.

Fixed home loans have started gradually coming down on longer terms – and we mean gradually. Lenders shifted the averages in the Mozo database down by a few basis points over the course of December for terms between 3-5 years.

Since fixed rates are predictive, this means lenders expect rates to fall sometime in the future – just not anytime soon. If you’re comparing fixed rates, it’s worth weighing up the security you get now with potential savings you could enjoy in future.

After all, when rate cuts hit, fixed home loans stay the same. On the other hand, when a rate hike hits, fixed home loans stay the same.

At the time of writing, these are the average fixed rates for owner occupiers with an 80% LVR and a $400,000 loan:

• 1-year: 6.54% p.a.
• 2-year: 6.47% p.a.
• 3-year: 6.44% p.a.
• 4-year: 6.62% p.a.
• 5-year: 6.65% p.a.

Here are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database ( 2 January 2024 )^^

Compare more variable rate home loans

Lowest and average fixed rates — Mozo database ( 2 January 2024 )^^

The above are the lowest rates in our database for borrowers with an LVR < 80%. More competitive rates are available for borrowers with lower loan-to-value ratios .

If you’re considering buying property or refinancing your existing mortgage, use Mozo’s home loan comparison table to examine lenders side-by-side, or use our refinance calculator to see how much you could save.

^^Interest rates are based on an owner occupier making principal and interest repayments on a $400,000 loan with an 80% LVR. Check out our dedicated Australian home loan statistics page for more information on average mortgage rates.

Compare home loans in the table below.