Home loan interest rates in Australia

By Jasmine Gearie · · 7 min read
Fact Checked
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Your home loan interest rate plays a major role in how much you spend on your mortgage, and a variation of just 0.10% can be the difference between saving hundreds of dollars on your home loan repayments every year.

That is why it’s a good idea to compare home loans at least once a year, so you can know if you’ve got a competitive interest rate, or if it’s time to consider refinancing your home loan.

The Reserve Bank of Australia (RBA) cut the cash rate by 0.25% in February 2025, marking an end to its rate hiking cycle which began in May 2022. Now that dozens of lenders have passed on the RBA’s cut, it’s a good time to reassess the market.

We track the interest rates of over 400 home loans in our database, including those from ANZ, Commonwealth Bank, NAB and Westpac, challenger banks, customer-owned credit unions and newer online-only players, to give you a comprehensive view of what’s available.

What is the average home loan interest rate in Australia?

RBA cash rate: 4.10%

Average variable home loan interest rate: 6.44% p.a.

Average Big Four bank variable home loan rate: 6.71% p.a.

Average one-year fixed home loan interest rate: 6.03% p.a.

Average three-year fixed home loan interest rate: 5.89% p.a.

Source: Mozo database. Average rates are for $400,000, owner occupier home loans, paying principal and interest, with a loan-to-value ratio (LVR) of <80%, as at 27 March, 2025.

Last updated 28 April 2025 Important disclosures and comparison rate warning*
What are your home loan needs?
Loan purpose
Buying or Refinancing
  • Promoted

    Unloan Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 20% min deposit
    • Redraw available
    Interest rate
    5.74 % p.a.
    Variable
    Comparison rate
    5.65 % p.a.
    Initial monthly repayment
    $2,915
    Go to site
    • Built by CommBank
    • The first home loan with an increasing discount (conditions apply)
    • No application or banking fees
  • Promoted

    Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 10% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.78 % p.a.
    Variable
    Comparison rate
    5.82 % p.a.
    Initial monthly repayment
    $2,927
    Go to site
    • $0 application fee to pay
    • Unlimited additional repayments
    • Apply in as little as 15 minutes
  • Promoted

    Fixed Rate Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 5% min deposit
    Interest rate
    5.49 % p.a.
    Fixed 2 years
    Comparison rate
    5.91 % p.a.
    Initial monthly repayment
    $2,836
    Go to site
    • No ongoing annual fees
    • Make up to $25,000 extra repayments during a fixed period, fee free (T&Cs apply)
    • Lock in for up to 5 years.
  • Promoted

    Fixed Rate Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • Interest only
    • 20% min deposit
    Interest rate
    5.49 % p.a.
    Fixed 2 years
    Comparison rate
    5.96 % p.a.
    Initial monthly repayment
    $2,836
    Go to site
    • Free extra repayments of up to $25,000 during the fixed rate period.
    • Split loan available
    • Weekly, fortnightly, or monthly repayment options
  • Promoted

    Variable Home Loan 90

    • Owner occupier
    • Principal & Interest
    • 10% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.79 % p.a.
    Variable
    Comparison rate
    5.83 % p.a.
    Initial monthly repayment
    $2,931
    Go to site
    • No monthly or ongoing fees
    • Option to add an offset for 0.10% p.a.

  • Clean Energy Home Loan - New Build

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 10% min deposit
    • Offset available
    Interest rate
    5.14 % p.a.
    Fixed 3 years
    Comparison rate
    5.68 % p.a.
    Initial monthly repayment
    $2,727
    No Partner link

  • Basic Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 30% min deposit
    • Redraw available
    Interest rate
    5.19 % p.a.
    Fixed 2 years
    Comparison rate
    5.78 % p.a.
    Initial monthly repayment
    $2,742
    No Partner link

  • Offset Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 30% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.19 % p.a.
    Fixed 2 years
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,742
    No Partner link

  • Fixed Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 40% min deposit
    Interest rate
    5.25 % p.a.
    Fixed 2 years
    Comparison rate
    5.62 % p.a.
    Initial monthly repayment
    $2,761
    No Partner link

  • Fixed Rate Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 5% min deposit
    • Redraw available
    Interest rate
    5.29 % p.a.
    Fixed 3 years
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,773
    No Partner link
Showing 10 results from 415 home loans

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What is a home loan interest rate?

A home loan interest rate is the amount of interest you’ll need to pay each year for borrowing money to purchase a property.

Each lender sets their own home loan interest rates, and they differ based on a variety of factors, including the type of home loan you choose.

Types of home loan interest rates

The type of interest rate you choose for your mortgage can affect how much you pay overall, and how much you pay each month. There are pros and cons to each type, so it’s important to consider which will suit you best.

Variable rate

  • Changes in line with the market
  • Can allow you to make extra repayments

A variable home loan interest rate means your rate and repayment amount can change at any time. A change can occur because the Reserve Bank of Australia (RBA) adjusts the official cash rate, or your lender makes an adjustment.

One drawback of a variable interest rate is that it’s impacted by rises and falls in the market, so it offers less certainty in how much your repayments will be over time.

However, variable rate home loans are popular in Australia because they’re often lower than fixed rates. A variable interest rate might suit you if you’re looking for flexibility, as you’ll have the option to make extra repayments and pay off your home loan faster.

Fixed rate

  • Locks in an interest rate for a period of time
  • Won’t benefit from cash rate cuts

A fixed home loan interest rate locks in your rate and repayment amount for a set period of time, usually between 1 to 5 years.

This can make budgeting easier, as you’ll have a set amount that you need to pay each month and it won’t be affected by rate increases.

The downside is that if the Reserve Bank cuts the cash rate, or your lender decides to lower its interest rates, your fixed rate will stay the same and you won’t benefit from a cut.

When your fixed term ends, you have the option to enter into a new fixed rate or switch to a variable rate.

In general, fixed interest rates are less flexible than variable mortgage rates, and you could end up paying penalties if you repay the loan early.

Split rate

  • Splits your home loan into fixed and variable portions
  • Can be split into any ratio you’d like

A split home loan involves separating your loan into two portions – one part with a fixed rate and another part with a variable rate.

The size of each portion is up to you, so your home loan can be split 50:50, 60:40 or however you’d like.

A split home loan can help you hedge your bets and get the benefit of both types of home loan rates.

The fixed rate portion won’t be impacted by interest rate rises, while the variable rate portion can benefit if rates are cut. It’s also likely that you’ll be able to make unlimited extra repayments to the variable portion, which could help pay off your mortgage faster.

How are repayments calculated on a home loan?

The amount of interest you pay each month depends on various factors including what type of rate you’re paying, how often your interest is calculated and how long is left on your home loan. There are also two different repayment types: principal and interest and interest-only.

Principal and interest (P&I)

  • Repayment goes towards paying off your home
  • Repayment may be higher than interest-only loan

When you’re paying principal and interest, your home loan repayments are reducing the principal (the amount you borrowed) and factoring in interest (the added cost of borrowing).

When you first start paying off a home loan, most of your monthly repayment will go towards paying interest and a little will go towards the actual loan amount.

As you chip away at the principal amount, the interest you need to pay on it will also get smaller. Eventually, most of your monthly repayment will go towards the principal, while a little goes towards interest.

Interest-only (IO)

  • Repayment goes towards covering interest
  • Popular with investors looking to sell

An interest-only home loan only pays interest on the amount you borrowed, not the loan amount itself.

This means your repayments will likely be lower than if you were paying principal and interest – because you’re not chipping away at the actual loan amount – so it could help you spend less in the short term if you’re on a budget.

But crucially, you won’t make any progress towards owning your home while on interest-only repayments.

Interest-only loans are popular with investors, because they’re often counting on the value of the home increasing enough to sell the property, pay off the loan and still make a profit.

Use our calculators

Use Mozo’s home loan repayments calculator to see how much your monthly repayments would be with either a principal and interest or interest-only home loan, and see how much total interest you would pay with each one.

Home loan interest rates: FAQs

Is the mortgage rate and home loan rate the same thing?

Yes, mortgage rate and home loan rate are interchangeable terms. Both refer to your home loan interest rate, which is the added cost your lender charges for borrowing money.

What is the comparison rate?

Your interest rate tells you the cost for borrowing money, but it doesn’t account for other costs attached to a home loan.

A comparison rate factors in the interest rate, as well as other fees connected to the home loan such as application fees, establishment fees and discharge fees.

The comparison rate is essentially an adjusted rate that calculates the total cost of the loan and helps you more accurately compare home loans across providers.

Who sets home loan rates?

Each bank and lender sets their own home loan interest rates, but they are influenced by the RBA’s official cash rate.

When the RBA changes the cash rate, banks and lenders will assess whether or not to pass the change onto their customers by either increasing or decreasing their interest rates.

How often do home loan rates change?

Home loan interest rates can change at any time, as they are informed by the RBA’s official cash rate and set by individual banks and lenders. On top of this, lenders may also change their home loan interest rates to protect profit margins.

How will home loan rate changes affect my mortgage repayments?

Home loan rate changes will affect your mortgage repayments if you’re on a variable rate.

If your lender increases their home loan rate your mortgage repayments will also get higher, but if your rate decreases, your repayments will get cheaper. You can see how a rate change would affect you by using our home loan rate change calculator.

The time between when a home loan rate is changed and when the adjustment is reflected on your bill varies across lenders, so contact your bank if you’re unsure.

Does my bank need to tell me if they are changing my home loan rate?

Your bank should notify you when your home loan interest rate is changing. Rate changes are typically announced on the bank’s website and you can be notified through email, online banking or your banking app.

When is the interest calculated on my home loan?

Interest is calculated daily by your lender. At the end of your billing period, each day’s interest is added together to find the total amount you’ll be charged.

Your billing period can be monthly, fortnightly or weekly – depending on the arrangement with your lender.

For example, if you’re on a monthly repayment schedule, your interest will be calculated each day and added together at the end of the month – this monthly amount will be the interest charged on your monthly statement.

Are home loan rates negotiable?

Yes, in many instances home loan interest rates can be negotiated with your bank or lender. It’s important that you compare home loans in the market more broadly before starting a negotiation, as this will help you understand what a better deal looks like in the current interest rate market.

How can I reduce the amount of home loan interest I pay?

The simplest way to reduce the amount of interest you pay is to secure a lower interest rate, which may involve refinancing your home loan.

Aside from a lower interest rate, you can try to reduce the amount of home loan interest you need to pay by:

  • Paying principal and interest (not interest-only)
  • Increasing the size of your home loan deposit
  • Reducing the length of your home loan term
  • Increasing your repayment frequency to weekly or fortnightly payments
  • Using an offset account
  • Making additional repayments during the loan term
How do I find the best home loan interest rate?

What is considered the best home loan interest rate will be different for everyone, and can depend on your individual needs.

For example, the best home loan interest rate for you may be the lowest available, or it may be an option that includes an offset account and good customer service at a reasonable rate.

It’s important to compare home loans so you can find the best interest rate for you. Remember that you can also negotiate with banks and lenders, so speak to providers to try and secure the best rate.

* 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.

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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