What are the best home loan rates in 2021?

By Katherine O'Chee · · 4 min read
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saving up for a first home

Looking to buy your first apartment or switch to a cheaper home loan this year? Given how much interest rates have fallen over the past 12 months, the general consensus is that 2021 could be a great year to tick off these goals.

The big question though, is what home loan rates should borrowers be looking for when shopping around? After three Reserve Bank cuts in 2020 which brought the official cash rate down by a massive 0.65%, what’s considered ‘low’ or ‘competitive’ has unsurprisingly changed a lot. 

As a rule of thumb, you’re likely paying too much with a rate above 3.00%, considering that a big bulk of owner occupier home loans now start with ‘2’ and some even begin with ‘1’.

Top fixed rate home loans

Since the last RBA cut in November, a number of home loans have dipped below the 2% threshold - the majority being fixed rate offers. So while the 3-year fixed rate average for owner occupiers sits at 2.38%, Mozo data reveals you can lock in rates as low as 1.95% for that same term length.

Home loan3-year fixed rate^
UBank UHomeLoan (Fixed)1.95% (2.27% comparison rate*)
CUA Fixed Rate Loan1.97% (3.86% comparison rate*)
IMB Bank Fixed Home Loan1.97% (2.97% comparison rate*)
QBank Fixed Rate Special1.97% (3.39% comparison rate*)
Endeavour Mutual Bank Fixed Home Loan
Sydney Mutual Bank Fixed Home Loan		1.98% (2.76% comparison rate*) 

For shorter terms (1 or 2 years), the lowest fixed rate in the Mozo database starts even lower at 1.89%, although a couple of those deals are exclusively for first home buyers.

Home loan2-year fixed rate^
Tic:Toc Fixed Home Loan1.89% (2.15% comparison rate*)
Endeavour Mutual Bank First Home Buyers 2 Year Fixed Rate (Special Offer) 

Sydney Mutual Bank First Home Buyers 2 Year Fixed Rate (Special Offer) 		1.89% (2.79% comparison rate*) 
Reduce Home Loans Home Owners Dream Fixed1.94% (2.59% comparison rate*)
QBank Fixed Rate Special 1.97% (3.54% comparison rate*)
bcu Fixed Rate Home Loan1.98% (3.77% comparison rate*)

Top variable rate home loans

What about if you want a mortgage with more repayment flexibility and other perks like an offset account? Then variable rate loans may be a better place to look. 

Although the past year has seen fewer lenders make moves on variable rates than fixed rates, the variable rate average has nonetheless dropped by 41 basis points since December 2019. 

For borrowers who’ve either saved up the standard 20% deposit or built at least 20% in home equity, here are the current variable rate leaders in our database - all of which sit substantially below the average of 3.31%.

Home loan (up to 80% LVR)Variable rate^Does it have an offset account?
Reduce Home Loans Super Saver Variable1.99% (2.05% comparison rate*)No
Pacific Mortgage Group Standard Variable Home Loan 2.09% (2.09% comparison rate*)No
Homestar Star Essentials Home Loan
2.14% (2.19% comparison rate*)
No
Homestar Variable Rate Loan2.14% (2.19% comparison rate*)Yes
FreedomLend Variable Home Loan 2.17% (2.17% comparison rate*)Yes
Well Home Loans Well Balanced 2.17% (2.20% comparison rate*)Yes

To make sense of these rates, let’s do the maths. Say you’re borrowing $700,000 over 25 years. According to our home loan repayments calculator, refinancing from the average variable rate (3.31%) to the lowest in our database (1.99%) could cut down your interest costs by $140,960 over the life of the loan.

Top low deposit home loans

Domain’s First Home Buyer Report last September found that it took first home buyers in Sydney a whopping six years and six months to put together a 20% house deposit. 

If you can’t afford to wait that long - especially amid forecasts that property prices are set to rise further this year - then chances are you’re considering a low deposit home loan instead. That’s a loan for borrowers with a deposit less than 20% or a loan-to-value ratio (LVR) above 80%. The catch though is, you’ll end up paying more in interest and monthly repayments.

That’s not to say you’re entirely shut from competitive rates. Here are the best home loan rates at 95% LVR (i.e. for borrowers with a 5% deposit) in our database.

Home loan (up to 95% LVR)Interest rate^For first home buyers only?
Illawarra CU Bare Essentials First Home Owners Special Offer 2.45% (2.50% comparison rate*)Yes
Illawarra CU The Works Package Intro Special Variable Home Loan 1.99% for 2 years, then 2.50% (2.93% comparison rate*)No
BankSA Basic Home Loan Special Offer2.54% (2.56% comparison rate*)No 
Bank of Melbourne Basic Home Loan Special Offer

St George Basic Home Loan Special Offer		2.59% (2.61% comparison rate*)

No 
G&C Mutual Credit Union First Home Loan Premium (Package)2.64% (2.65% comparison rate*)Yes (must be eligible for First Home Loan Deposit Scheme)

Just beware that if you have a small deposit but no guarantor (either your parents or the government under the First Home Loan Deposit Scheme), then you may have to pay Lenders Mortgage Insurance, which could amount to thousands of dollars.

Your next steps 

Now that you have a clearer idea of what home loan rates you should be aiming for, it’s time to shop around!

Get started with a few competitive options below, or visit our home loans comparison hub for even more offers from over 80 different lenders.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can compare more home loans here.
Last updated 27 July 2024 Important disclosures and comparison rate warning*

Promoted

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Optimum Fixed Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.69 % p.a.
    Fixed 3 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    Lock in a competitive interest rate and enjoy peace of mind for the fixed period. Available for owner occupied new and refinanced home loans with at least 20% deposit. Split option available as well as offset and redraw. Noapplication, ongoing or banking fees. Third Party fees may be applicable - payable within loan repayments. Extra repayments up to $20K per annum permitted. Apply online, 100% member owned credit union.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • OMG Home Loan

    • Owner Occupier
    • Principal & Interest
    • <60% LVR
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.02 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.

  • Flex Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    5.99 % p.a.
    Fixed 3 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

  • Express Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <90%
    Interest rate
    6.01 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,001
    Go to site

    Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Flex Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.38 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $10,000,000.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.54 % p.a.
    Fixed 2 years
    Comparison rate
    7.10 % p.a.
    Initial monthly repayment
    $3,174

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

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Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

^Rates drawn from the Mozo database, accurate as of 13 January 2021.

* 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.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

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