What is the current interest rate for home loans?

Current mortgage interest rates in Australia vary by lender and are influenced by the RBA’s cash rate, which is 4.35% as of October 2024. Most variable interest rates for owner-occupiers sit between 6% and 7%.

How can I lower my home loan interest rate?

To secure a lower interest rate, consider refinancing, making a larger deposit, or improving your credit score. Comparing rates across lenders and opting for loan features like offset accounts can also help.

Latest Interest Rate Update

Staying Informed with the Latest Interest Rate Update in Australia

As of February 2025, the Reserve Bank of Australia (RBA) has lowered the cash rate for the first time since 2020, reducing it by 0.25% to 4.1%. While lenders may take up to two weeks to decide on passing down the full rate cut, borrowers could see a modest 2-3% increase in their borrowing power. Banks will adjust their rates at different times, and we are actively tracking these changes to keep you updated.

At Ausfirst Lending Group, we’re here to guide you through what the interest rate update in Australia means for your mortgage strategy. This page provides a comprehensive look into what the cash rate is, how the RBA sets it, and how it affects home loan rates. You’ll also find insights on average mortgage rates, tips for navigating the loan market, and an overview of lenders offering home loans, equipping you with the information you need to make well-informed financial decisions.

What Is the Cash Rate, and How Does It Affect Home Loan Interest Rates?

The cash rate, determined by the RBA, is the interest rate banks impose on each other for short-term “overnight loans” – quick loans that allow banks to balance their daily cash needs. This rate influences various interest rates across the economy, including mortgages, personal loans, savings accounts, and term deposits. By adjusting the cash rate, the RBA aims to manage inflation, employment, and overall economic stability. When inflation is high, for instance, the RBA may increase the cash rate to curb spending; when economic growth is needed, it may reduce the rate to encourage borrowing.

Home loan interest rates typically follow the cash rate’s direction, affecting how affordable your mortgage can be. When the cash rate is low, lenders often reduce their rates, making your monthly repayments more manageable and appealing, whether you’re an existing homeowner or a first home buyer. However, when the cash rate rises, mortgage rates typically follow suit, which can lead to higher monthly costs. Even a small shift in the cash rate can significantly impact long-term loan costs, so staying informed on these updates helps you make better mortgage decisions.

What Are the Current Mortgage Interest Rates?

While the RBA’s cash rate serves as a benchmark for lenders when setting home loan rates, actual mortgage rates will vary depending on whether the loan is fixed or variable, what your loan term is, and what your loan-to-value ratio (LVR) is.

Variable Rates

Home loan rates with a variable interest structure are directly influenced by the RBA’s cash rate decisions, meaning they can increase or decrease over time. Currently, the typical variable rate for owner-occupiers making principal and interest repayments is about 6.71%, though this can vary depending on the lender and your financial circumstances as a borrower. Choosing a variable rate loan allows for potential savings when interest rates decline, but it also comes with the risk of higher repayments if rates rise.

Fixed Rates

Fixed interest rate mortgages allow borrowers to lock in an interest rate for a set period, usually between one and five years. The rate offered depends on the selected term, with shorter terms often having lower rates. For instance, the average two-year fixed rate for owner-occupiers is currently 6.03%. Opting for a fixed rate can provide stability by keeping repayments unchanged for the duration of the term, which can be beneficial if you’re looking to avoid fluctuations in interest rates.

Rate Differences for Investors and Owner-Occupiers

Investors may find higher average rates than owner-occupiers, given the added risk lenders associate with investment properties. Both types of borrowers, however, can compare fixed and variable options to find competitive rates.

Which Lenders Offer Home Loans in Australia?

Below is a list of several lenders in Australia that offer home loans, along with links to their interest rate update today. These lenders range from traditional banks and credit unions to non-bank financial institutions, offering various loan products to suit different needs and preferences.

The Big Four Banks

These banks dominate the home lending market in Australia, offering extensive loan options, competitive interest rates, and comprehensive banking services.

Australia and New Zealand Banking Group (ANZ) – Offers competitive home loan products, focusing on flexible repayment options and digital tools for easy loan management.
Commonwealth Bank of Australia (CBA or CommBank) – Australia’s largest bank, offering a diverse range of home loans with flexible rates and personalised support.
National Australia Bank (NAB) – Provides home loans with flexible features, including fixed and variable rate options, as well as digital tools for managing mortgages.
Westpac Banking Corporation – Known for home loan options that cover first-time buyers to investors, with a variety of features like split loans and offset accounts.

Other Major Banks

These banks are well-established in Australia – offering a range of financial products, including home loans – but aren’t part of the Big Four.

AMP Bank – Provides home loans with a focus on competitive interest rates and flexible features.
Bank of Queensland (BOQ) – Known for personalised banking and flexible home loan options.
BankSA – A subsidiary of Westpac, focusing on home loans for South Australian residents.
Bankwest – A part of Commonwealth Bank, offering various home loan products, primarily in Western Australia.
Bendigo and Adelaide Bank – With a strong community focus, offering competitive home loan options.
Internationale Nederlanden Groep (ING) – Known for online banking and home loans with straightforward applications.
Macquarie Bank – Provides a range of mortgage options and is known for flexible terms and investment loans.
St.George Bank – Another subsidiary of Westpac, providing home loans with various features.
Suncorp Bank – Offers extensive banking services with home loan products, primarily in Queensland.
Virgin Money – Digital-focused, providing various home loan options.

Customer-Owned Banks or Mutual Banks (Credit Unions)

These banks operate as customer-owned institutions, typically offering home loans with competitive rates and flexible terms, and often reinvesting profits to benefit their members.

Auswide Bank – Provides a range of home loan products with a focus on community-oriented banking.
Heritage and People’s Choice – A recent merger, providing a range of home loan solutions.
Newcastle Permanent – Offers home loans in Newcastle and surrounding communities.

Specialised Customer-Owned Banks (Serving Specific Professions or Communities)

These customer-owned banks offer tailored services, particularly home lending, for specific professions or communities.

Australian Military Bank – Specialises in financial products, including home loans, for Australian Defence Force personnel.
Firefighters Mutual Bank – Provides home loans and financial services specifically for firefighters.
P&N Bank – Western Australia’s largest locally owned bank – originally founded for police and nurses – offering a range of home loans.
Teachers Mutual Bank – Offers home loans and financial products designed for educators, also covering other related sectors like healthcare and university staff.

Digital Banks

These are fully licensed banks offering a broad range of banking services, including loans, exclusively online.

Up Bank – Known for its user-friendly app, strong savings features, and various home loan options tailored for digital-first users.

Non-Bank Lenders

These lenders specialise in lending but do not hold a traditional banking licence, offering specialised loan products instead.

Pepper Money – Known for flexible lending solutions, particularly for borrowers with complex credit histories.
Firstmac – Offers home and investment loans at competitive rates.
La Trobe Financial – Offers specialised lending options, including home loans, for borrowers with unique financial needs.
RedZed – Focuses on lending to self-employed individuals and those with unique financial circumstances.

Optimising Your Mortgage Strategy Amid Interest Rate Changes with Ausfirst Lending

At Ausfirst Lending, we know that every interest rate update in Australia can impact your mortgage strategy and financial plans. Our team of mortgage brokers stays up-to-date with the latest changes in Australia’s rates, providing you with timely guidance to adjust your mortgage accordingly.

With insights into options like refinancing your mortgage or choosing the right rate structure, we ensure you’re prepared for any market shifts, helping you maximise your mortgage’s potential while staying within budget.

Let Ausfirst Lending support you in making confident, informed choices that safeguard your financial future.

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Why Choose Ausfirst Lending Group

Dedicated Guidance and Comprehensive Service

At Ausfirst Lending Group, you are our top priority. We are dedicated to providing comprehensive assistance from start to finish, not just because we are legally obligated to act in your favour, but because we genuinely want to ensure your success.

We focus on your objectives and requirements, and combine deep industry knowledge with a strong commitment to finding loan options that truly align with your financial needs. We simplify the entire loan application process by assessing your borrowing capacity, organising documentation, and negotiating terms on your behalf, all while securing the most favourable outcomes for you.

Extensive Lender Options

One of the key benefits of working with Ausfirst Lending is our access to a diverse range of lenders. Instead of presenting just one option, we assess a broad array of options to secure a loan for your financial needs. This allows us to tailor solutions that match your specific goals and circumstances, ensuring you get the best possible outcome.

Lenders’ Interest Rates

Housing and Business Rates (December 2024)

Disclaimer: Ausfirst Lending Group does not offer these rates, and they may fluctuate over time.

Loan purpose	Outstanding loans % per annum	New loans % per annum
Housing (Table F6)
Owner-occupier	6.13	6.22
– Principal-and-interest	6.1	6.15
– Interest-only	7	7.02
Investment	6.49	6.45
– Principal-and-interest	6.42	6.38
– Interest-only	6.66	6.56
Business (Table F7)
Small business	7.43	7.27
Medium business	6.26	6.04
Large business	5.81	5.58
a) Includes loans at variable and fixed interest rates Sources: APRA; RBA

Latest News

ABC News: Why are the banks waiting to pass on the Reserve Bank’s rate cut?

Following the Reserve Bank of Australia’s (RBA) rate cut announcement, major banks quickly confirmed they would reduce mortgage rates, but implementation is delayed.
While some smaller lenders acted immediately, the big four banks – Commonwealth Bank, ANZ, NAB, and Westpac – scheduled their rate reductions to take effect weeks later.
Banks are not required to pass on rate cuts, and historically, they have taken anywhere from 10 to 17 days to implement changes.
Delays in passing on lower rates allow banks to maintain profitability in a falling rate environment.
Customers may not automatically see lower repayments, as some banks require borrowers to request an adjustment.
While the delay results in borrowers paying extra interest, those who keep repayments unchanged can reduce their mortgage faster.
Experts suggest borrowers monitor their lenders and consider refinancing to secure better rates as competition in the market grows.

Yahoo! Finance: Dates Australian banks will pass on interest rate cut to mortgage holders after RBA move

Australian lenders are preparing to implement the Reserve Bank of Australia’s (RBA) recent interest rate cut, which lowered the cash rate from 4.35% to 4.10%.
Some banks acted immediately, while others, including the major banks, have scheduled their rate reductions over the coming weeks.
Analyst Graham Cooke highlights that even brief delays in passing on rate cuts can generate millions in additional revenue for banks.
A detailed schedule shows when different lenders, including NAB, Commonwealth Bank, ANZ, and Westpac, will apply the lower rates, with dates ranging from February 25 to March 8.
Savings from the 0.25% rate cut depend on loan size, location, and repayment terms, with homeowners expected to save between $40 and $190 per month.
Sydney house owners are projected to benefit the most, with estimated savings of $190 per month, while Northern Territory apartment owners may see as little as $40 in monthly relief.
Housing affordability remains a major challenge, and while the rate cut offers some relief, experts suggest multiple reductions may be needed to make a significant impact.

FAQs on Home Loan Interest Rates

A “good” interest rate depends on current market conditions and the type of home loan you’re considering, such as fixed or variable. Generally, a competitive rate is one that is lower than the national average, which tends to fluctuate with the Reserve Bank of Australia (RBA) cash rate. As of recent months, variable rates for owner-occupiers are around 6-7%, but individual rates may vary based on factors like your loan type, credit profile, and deposit amount. Comparing rates among lenders and understanding your financial goals can help you find a rate that works best for you.

Current mortgage interest rates in Australia vary by lender and are influenced by the RBA’s cash rate, which is 4.1% as of February 2025. Most variable interest rates for owner-occupiers sit between 6% and 7% due to recent cash rate changes, while fixed rates depend on the chosen term, often ranging slightly higher for longer fixed periods. To find the most accurate rate for your situation, check with your lender or review current rates on comparison sites, as they reflect real-time changes across the market.

The RBA cash rate serves as a guide for lenders when setting their home loan rates. A high cash rate often leads to higher mortgage interest rates, making repayments more costly. Conversely, when the cash rate is low, lenders typically lower their mortgage rates, making borrowing more affordable. However, lenders also consider factors like funding costs and competition, so the cash rate isn’t the sole factor affecting home loan interest rates.

Deciding between a fixed or variable rate depends on your financial situation and goals. A fixed rate locks in your interest rate for a set period, giving you predictable monthly payments, which can be beneficial if you expect rates to rise. A variable rate, however, fluctuates with the cash rate, potentially offering lower costs when rates are down but higher payments if they increase. Many borrowers opt for split loans to balance both options, with part of the loan fixed and part variable.

To secure a lower interest rate, you can consider refinancing your loan, especially if current rates are lower than what you initially signed up for. A larger deposit or better credit score can also help you qualify for a lower rate. Additionally, comparing rates across lenders, considering loan features like offset accounts, or opting for a shorter loan term can reduce the total interest you’ll pay over time.

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