June home loan snapshot: Has the home loan rate war ended?

Winter in Katoomba, Blue Mountains

Last month, the Reserve Bank defied expectations with an additional 0.25% hike to the official cash rate. Lenders soon jumped at the opportunity to lift their interest offers on variable home loans – with some outrunning even the RBA with 35 - 50 basis point jumps.

Cashback offers for refinancers have dried up while even introductory rates saw significant rises. Seems lenders are no longer concerned about being competitive: now, it’s all about recouping their costs.

As a result, the average variable interest rate for owner-occupiers making P&I repayments sits at 6.31% p.a. in the Mozo database. Oh, Alexander wept.

Yet there is some good news buoying the sinking house prices: we may be nearing the next rate hold, with many experts predicting a steady cash rate in June and July. While the August RBA meeting remains ‘live’, this could smooth the way for buyers ready to jump into an already warm winter property market. 

So have the recent changes reshuffled lenders for June? Let’s break down the numbers.

Fixed rates home loans still point north, though longer terms may wind back

Collage people buying a house.

Fixed rate home loans remain hard sells in a tight market, with some shorter terms climbing point by point in the Mozo database. However, some lenders even made significant cuts. Four and five year terms in particular inched backwards, suggesting banks expect rates to smooth over in the long run.  Given how high variable rates have soared, some of these offers may even look competitive. 

Indeed, locking in your interest rate to ride out the remainder of the rate cycle could be a good way of guaranteeing your repayments for a few years. But with inflation expected to slow by mid-2024, variable rates may unwind sooner than later. 

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: 5.75% p.a.
  • 2-year: 5.83% p.a.
  • 3-year: 5.87% p.a.
  • 4-year: 6.21% p.a.
  • 5-year: 6.27% p.a.

Recent home loan rate movements

Collage of people in their home with home loan money symbols

Sweeping changes hit the home loan market last month. Here are some of the most eye-watering trends. 

  • Lenders funded by Adelaide and Bendigo Bank, such as Tic:Toc, Mortgage House, Yard, and Qantas Money hit some of their variable rates with increases of 0.30% or more.
  • Commonwealth Bank, Westpac, and Suncorp hiked their packaged and welcome rates.
  • Cashback for refinancers, no more. Commbank, Westpac, NAB, Suncorp, and ING will officially step back their cashback offers this winter.

All makes the graph more impressive!

Current lowest home loan rates

Woman looks at home loan rates collage

While offers below 5% are few and far between, there are still some sharp ones available in the Mozo database. Here are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database (1 June 2023)^^

LenderLoanVariable rate
The Mutual Bank
Special Budget Home Loan
4.94% p.a. (4.95% p.a. comparison rate*)
Community First BankBasic Variable Home Loan Special4.95% p.a. (5.00% p.a. comparison rate*)
UnloanUnloan Variable4.99% p.a. (4.90% p.a. comparison rate*)
Homeloans360Owner Variable Home Loan5.04% p.a. (5.04% p.a. comparison rate*)

Lowest and average fixed rates — Mozo database (1 June 2023)^^

TermRate leaderFixed rate
4.99% p.a. (5.77% p.a. comparison rate*)
2-yearAustralian Mutual Bank5.23% p.a. (5.92% p.a. comparison rate*)
3-yearThe Capricornian4.99% p.a. (6.29% p.a. comparison rate*)
4-yearHSBC5.29% p.a. (5.83%% p.a. comparison rate*)
5-yearHSBC5.29% p.a. (5.81%% p.a. comparison rate*)

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 - last updated 8 December 2023

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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