RateCity.com.au analysis shows if an owner-occupier with a $400,000 mortgage took this loan out instead of the average new customer variable rate of 2.78, they could potentially be $4,882 ahead in the first year, including refinancing costs. 

However, after three years borrowers could potentially be $4,784 worse off once the revert rate is factored in, unless they switch or refix their loan.

Cost of $400k home loan (interest plus fees) 

Notes: based on an owner occupier paying principal and interest, switching loans 5 years in to a 30-year home loan with a balance of $400K. Assumes the customer does not refix / refinance after the 1-year fixed rate expires. Costs include discharge fees, average upfront fees but not government fees. RBA new customer variable rate from February 2021.

Sally Tindall, research director at RateCity.com.au, said smaller lenders were still trying to undercut their competitors in the short-term fixed rate market as they battle for business.

“This is the lowest mortgage rate in our record books, but you have to look past the headline to check whether it's going to work in your favour,” she said.

“After the first year, the rate reverts to 4.06 per cent – that's a huge jump from 1.67 per cent and if unprepared, you could get caught out.

“Pro-active mortgage holders can potentially get ahead if they commit to refinancing after the first year, but there's no guarantee these ultra-low fixed rates will be around at that point,” she said.

Lowest 1-year fixed rates on RateCity.com.au

Source: RateCity.com.au. Rates are for owner occupiers paying principal and interest. Some LVR requirements apply. Greater Bank (NSW, QLD, ACT only), RACQ (QLD only).

Lowest owner-occupier rates on RateCity.com.au

Source: RateCity.com.au. Rates are for owner occupiers paying principal and interest. Some LVR requirements apply.