The Reserve Bank of Australia started lifting the official cash rate target in May 2022. Banks have responded by lifting rates on home loans and other products. It's good news for savers, bad news for borrowers.
Australia's Big Four banks are the Commonwealth Bank, NAB, Westpac and ANZ. Together these big institutions dominate the market for loans, savings accounts and other consumer finance products.
The table below contains the lowest variable home loan rate from each of the Big Four banks (owner-occupier loans with 20% deposits).
The lowest home loan rates on the market typically come from smaller online lenders or customer-owned institutions like credit unions.
But the Big Four banks are not that far behind, and sometimes have rates that are almost as competitive.
Here's a graph charting the lowest rates for different loan types each month.
And here's how big the difference is between the average interest rates on the market and the lowest rates available on Finder.
| Australian interest rates November 2023 | Data |
|---|---|
| Average variable mortgage interest rate | 6.72% |
| Lowest variable rate available on Finder* | 5.59% |
| Average fixed mortgage interest rate | 6.55% |
| Lowest fixed rate available on Finder* | 5.48% |
*Lowest rates listed above are based on products from lenders with whom Finder has a commercial partnership.
As interest rates have risen on home loans, lenders have also started lifting interest rates for savings accounts.
This means the average Australian with some money in their savings account can finally earn a bit more interest.
For high interest savings accounts, the Big Four tend to be less competitive than the highest rates on the market. And the highest rates from other banks tend to be limited to borrowers under 35 years of age and require you to deposit a certain amount each month.
Term deposits are a safe way to lock up some of your cash for a certain period of time and earn a relatively high rate.
As with savings accounts, these rates have risen as the cash rate has increased. This means term deposits are becoming more popular as the return on your money is higher.
The term deposit rate you can get depends on:
The interest rate on a financial product determines how much interest is charged or generated on an amount of money.
📌 For borrowers a higher interest rate means you're charged more for the money you borrow. A lower rate makes money cheaper to borrow.
📌 For savers, a higher interest rate means you can earn more interest on the money you've saved. A lower rate means you earn less interest.
Here are some simple examples:
This includes the interest charged, plus some of the loan principal.
Now if your rate increased to 5.50%, your monthly repayments would rise to $2,272.
Use one of Finder's calculators to work out how interest rates affect your loans and savings.
The Reserve Bank of Australia is the nation's central bank. One of the RBA's main roles is to conduct monetary policy, which includes influencing interest rates.
The RBA sets the official cash rate target, or the cash rate, which is an interest rate target that affects the cost of banks borrowing money from each other at short notice. This rate in turn affects interest rates on variable rate home loans and savings accounts.
An increase to the cash rate means higher rates for Australian consumers. This means they can earn more through savings accounts and term deposits. But it means their home loan repayments get more expensive.
A cut to the cash rate makes borrowing cheaper. It can mean lower repayments for borrowers with home loans. But it means your savings account interest rate will be lower too.
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