Variable interest rate home loans
Looking for a flexible mortgage with a low variable interest rate? Compare offers from 2.19%.
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Compare a range of variable mortgages suitable for most Australian borrowers in the table below or learn more about these loans.
Athena Home Loan Offer
Apply for the Athena Celebrate Home Loan - 60% LVR Owner Occupier, P&I and get a low variable interest rate, plus no application and ongoing fees.
- Interest rate of 2.34% p.a.
- Comparison rate of 2.34% p.a.
- Application fee of $0
- Maximum LVR: 60%
- Minimum borrowing: $100,000
- Max borrowing: $2,000,000
Compare variable rate mortgages from across the market
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- A comparison of home loans from multiple lenders.
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Lowest variable owner occupier rates for November 2020
- Community First Accelerator Home Loan Package - 2 Year Intro Rate Variable New Loan Offer (Owner Occupier, P&I): 1.99% p.a., comparison rate: 3.25% p.a.
- loans.com.au Smart Booster Discount Variable Home Loan - 1 year: 1.99% p.a., comparison rate: 2.47% p.a.
- Reduce Home Loans Super Saver Variable: 2.19% p.a., comparison rate: 2.23% p.a.
- Well Home Loans Balanced Variable - LVR 80% (Owner occupier, P&I): 2.17% p.a., comparison rate: 2.2% p.a.
- Freedom Lend Variable Home Loan - LVR <= 80% (Owner Occupier, P&I): 2.39% p.a., comparison rate: 2.39% p.a.
These are the lowest variable rates in our database for September, with minimum deposit sizes of 20% or lower. There may be lower rates on the market.
How do variable home loans work?
A home loan with a variable interest rate can rise or fall whenever the lender decides to raise or lower it. This is the opposite of a fixed rate, which by definition remains the same during a set period of time.
Lenders raise or lower their rates depending on various factors, such as their funding costs (where they get the money to cover mortgages), a desire to be competitive or changes to the official cash rate.
Despite this potential volatility, variable rate mortgages don't usually change all the time. And while a rate increase means your repayments rise, a rate drop means your repayments get cheaper.
How does the RBA cash rate affect variable rate loans?
Every month (except January) the Reserve Bank sets the official cash rate. This rate affects the funding costs of variable home loan interest rates. If the rate rises, you can expect lenders to increase their variable rates. If the rate falls, most lenders will pass on some (or all) of the cut to their variable rate customers.
In 2019, the RBA cut the cash rate three times, in June, July and October and then it cut twice in March 2020. Each cut was 25 basis points (or 0.25%). This meant big savings for variable borrowers, with some lenders passing on close to the full 25 basis points each cut.
In 2010, however, the Reserve Bank raised the cash rate four times, which meant many variable borrowers found their interest rates a full 100 basis points higher by December.
Why should I consider a variable rate home loan?
While variable rates can change any time, there are several reasons many borrowers prefer them. This mainly comes down to flexibility and features.
Quick facts: Fixed and variable rates
- The lowest variable rate available on Finder right now is 2.19%.
- The lowest fixed rate available on Finder right now is 2.09%.
- Variable rate mortgages are more likely to have offset accounts and redraw facilities.
- Refinancing a fixed rate loan comes with higher costs.
However, every individual loan is different. Though less common, it's possible to find a fixed rate loan with low fees and an offset account. And fixed rate loans are currently some of the most competitive on the market.
To see how the lowest variable rates stack up against the lowest fixed rates, check out our cheap home loan rates page. Every month we scour Finder's mortgage database and create a list of the 10 lowest fixed and variable loans.
The split rate option
Australian borrowers don't have to pick between variable and fixed. Many lenders allow you to split your loan into fixed and variable portions. You can divide your loan amount into equal fixed and variable portions, or in any proportion you choose.
Splitting lets you enjoy the stability benefits of a fixed rate and the flexibility of a variable rate. It's a little complicated, but your lender or a mortgage broker can help you calculate the best split for you.
What should I look for in a variable rate loan?
When comparing variable interest rate mortgages, you should obviously look at the interest rate first. A lower rate means lower repayments.
Here's a quick example using the same loan amount but with a 31 basis point difference in the rate:
|Details||Higher rate||Lower rate|
|Loan term||30 years||30 years|
|Savings (30 years)||N/A||$23,040|
You can use a repayment calculator to see the difference between various rates, or check the repayment column in the loan table above.
A variable loan's features can be useful, if you use them. For example, if you have extra savings, you might want a loan with an offset account so you can save cash and minimise your interest payments.
If you don't need this feature, you can look for a loan without it, which might have a lower interest rate.
A variable rate home loan can come with a range of fees. If the loan works for you and the interest rate is low, a few fees aren't so bad. But if you can avoid fees, then why pay more?
More guides on Finder
Introductory Variable Rate Home Loan Comparison
If you are a first home buyer and are looking to save money on your home loan, you should consider an introductory rate home loan. These can save you thousands in interest repayments, read on to find out more.
Australian lenders standard variable interest rates
Keep up to date with all the major lenders standard variable rate home loan interest rates.
Home Loan OffersImportant Information*
Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
Up to $4,000 refinance cashback. A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get $4,000 cashback (Other terms, conditions and exclusions apply).
A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.
Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.
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