10-year fixed mortgage rates

Mortgage rates for 10-year fixed can be a beneficial choice for some borrowers, providing long-term stability in repayments. However, it may not suit everyone. Here are some factors to consider: 

Advantages of 10-year fixed mortgage rates 

• rate hikes protection: you are protected against rising interest rates set by the Reserve Bank of Australia (RBA) or lenders 
• consistent repayments: your repayments remain steady for 10 years, aiding in long-term financial planning 
• easier budget management: predictable repayments help in managing household budgets effectively 

Disadvantages of 10-year fixed mortgage rates 

• high exit costs: early repayment or refinancing may incur substantial exit fees 
• no gains from rate reductions: if interest rates decrease, you will not benefit from lower rates 
• fewer loan features: typically, fixed-rate loans lack features like offset accounts or redraw facilities 

Factors to consider before choosing a 10-year fixed loan rates 

• future property plans: if you plan to move or sell your property within 10 years, a fixed-rate loan may not be ideal 
• extended commitment: a 10-year term requires confidence in your financial stability and plans for the next decade 
• restrictions on extra payments: fixed-rate loans often restrict additional repayments, which can limit your ability to reduce the loan principal faster 

Deciding if a 10-year fixed mortgage rate is a good idea depends on your financial situation and future plans. It offers repayment stability and protection from interest rate hikes but lacks flexibility. Consult with a mortgage broker to assess if this option aligns with your financial goals. 

Fixed interest rates are often higher than variable rates due to the lender's need to manage risk over the fixed term. Here’s why: 

Risk management and predictability 

• risk buffer: lenders include a risk premium in fixed rates to protect against potential rate increases during the term 
• cost of funds: fixed rates factor in the predicted cost of funds over the fixed term, which can be uncertain 

Market expectations 

• rate predictions: if the market expects rates to rise, fixed rates will generally be higher to account for this future increase 
• economic conditions: fixed rates provide a hedge against economic volatility, ensuring lenders cover their costs 

Example of a 10-year fixed mortgage rate scenario 

Imagine choosing the cheapest 10-year fixed rate mortgage that Australia offers and locking in at 4% for 10 years while the variable rate is 3%. The extra 1% is the lender's way of protecting themselves against future rate increases. If rates rise to 5%, your fixed rate remains at 4%, but the lender prepared for this by charging you more initially. 

So, is fixed interest rate better than variable? 

Fixed rates are generally better to lock in than variable if the interest rate is low but is expected to rise soon. Fixed mortgage rates are typically higher than variable rates because they provide long-term security against rate increases and economic changes. Lenders charge a premium for this certainty, reflecting the risks they assume over the loan term.  

Understanding this helps you make informed decisions about 10-year fixed mortgage rates. Assess your own financial strategies for the future before locking in this long-term mortgage deal. 

At the end of a 10-year fixed mortgage period, your loan usually reverts to the lender's standard variable rate, which can still change. Alternatively, you can ask the lender for other options.  

Reversion to variable rate 

• standard variable rate: your loan usually reverts to your lender's standard variable rate 
• rate fluctuation: the standard variable rate can change based on the RBA’s cash rate and other economic factors, as opposed to a fixed rate 

Refinancing options 

• refix your loan: you may choose to refix your mortgage at a new fixed rate, either for another 10 years or a shorter period 
• switch lenders: refinancing with a new lender could offer better rates or loan features 
• rate review: request a rate review from your current lender to ensure you are getting a competitive rate 

Key considerations 

• future plans: consider your strategies, like moving or making large or additional repayments, before deciding to refix or switch 
• loan features: evaluate if you need loan features like offset accounts, redraw facilities, or the ability to make extra repayments 

When your 10-year fixed mortgage rates period ends, your loan usually reverts to a variable rate, but you have options. You can refix, refinance, or stay with the variable rate, depending on your financial goals and market conditions.  

Consult with a mortgage broker to choose the best 10-year fixed mortgage rates that provide the most suitable terms for your financial goals. 

Yes, 10-year fixed mortgage rates do exist. They allow borrowers to lock in their interest rate for a decade, providing long-term repayment stability. However, these loans are less common in Australia compared to shorter fixed-term loans. 

Comparison with other fixed rates 

• shorter fixed terms: most Australian lenders offer fixed-rate mortgages for 1 to 5 years 
• long-term options: while 10-year fixed loan rates are available, they are offered by fewer lenders 

Why doesn't Australia have a 30-year fixed rate mortgage? 

Few lenders provide 10-year fixed mortgage rates due to the short-term nature of Australia's debt market and the lack of a well-structured secondary mortgage market. 

In other countries, 10-30-year fixed rates are offered due to different financial structures of lending institutions and national economies. 

The United States is the only country where 30-year fixed mortgages are popular, thanks to government-backed entities like Freddie Mac and Fannie Mae. 

Check to see if a 10-year fixed mortgage rate fits your financial goals. Consult a mortgage adviser today.