What are the best home loan rates in 2021?

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*)
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*)

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.

Compare low rate home loans - last updated 9 December 2023

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Home Variable Rate

    Owner Occupier, Principal & Interest, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.15% p.a.

    Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.

  • Mozo Expert Choice Badge
    Variable Rate Home Loan Special Offer

    Package, Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.51% p.a.

    Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.

  • Mortgage Simplifier

    LVR<80%, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.43% p.a.

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws. Winner of Australia’s Best Essential Bank in the Mozo Experts Choice Awards.


^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.