Best variable home loan rates

How to compare variable rate home loans

Don't settle for a third-rate home loan. Make sure you get the best variable rate home loan deal by looking at 4 things:

1. The interest rate

The interest rate determines how expensive your repayments will be. The lower the rate, the better.

2. Fees

Most home loans have some fees, but some have almost none. The key ones to watch out for are application fees, monthly fees and settlement fees.

3. Loan purpose

If you're looking to finance an investment property then you will need an investment loan.

If you're buying (or refinancing) a loan for your home then you need an owner-occupier home loan.

4. Loan features

Variable rate loans come with the most features. You can make extra repayments to pay the loan off faster. And most variable rate loans have a redraw facility too.

Some variable rate loans have an offset account, which functions like a bank account. But instead of earning interest on the savings it reduces your loan's interest charges and gets you out of debt faster.

Our expert says

"If you have a variable loan, it's a great idea to also have an offset account. While that can mean extra costs, it allows you to offset your savings against your loan and can save a lot in a high-interest world."

Graham Cooke

Head of Consumer Research

What impacts variable interest rates?

Loan-to-value ratio: The minimum deposit you have will impact the variable interest rate you get. A higher loan against the property price will usually lead to a higher interest rate.

RBA: As the RBA decides what the national cash rate is doing, variable interest rates will follow.

Home type: Whether you're buying a home to live in or an investment property will change the interest rate you get.

Features: Very often, variable loans with additional features like an offset account might mean you pay a slightly higher interest rate.

Pros and cons of a variable rate home loan

Variable home loans market update for October 2026

• The lowest variable home loan rate right now on Finder is 5.79%.
• The average variable home loan rate on the market is 6.93%.

The RBA raised the cash rate three times in 2026, in February, March and May, taking it to 4.35%. It has been held there at every meeting since, most recently in August.

The latest inflation figures continue to show it's sitting at around 3.7%, with expectations that it won't be coming down any time soon. Homeowners can therefore prepare for more rate rises throughout 2026.

Is now a good time to get a variable rate home loan?

There's never really a "best" time to get a variable rate home loan. When rates are falling, variable rate loans can work out better.

Fixed rate loans are great when rates are rising fast. That was the case in 2022–23.

During 2025 we saw 3 interest rate cuts. This was good news if you had a variable rate loan.

But it's important to remember that you can never actually guarantee how rates will move. A few months ago most people believed interest rates would keep falling into 2026, but we now know the opposite is happening.

With the latest interest rate rise this might mean it's not a good time to get a variable rate home loan, but there's really no way to know if that'll continue to be the case in a few months' time.

When deciding between fixed and variable it's more important to think about how comfortable you are with the current rate and whether you can afford more rate rises.

What's the difference between fixed rate and variable rate home loans?

Variable rate mortgages...

• Go up and down over time. Lenders can change your rate at any time (usually when the RBA changes the official cash rate). In 2025, the cash rate fell 3 times and home loan rates fell with it.
• Are flexible. You can repay a variable rate loan early or refinance and your lender won't charge any fees.
• Usually have lower rates. Fixed rates are typically higher than variable rates (that's the price of certainty). But as we can see in the current rate environment that's not always the case. Fixed rates are currently lower than variable rates.

Fixed rate mortgages...

• Won't change (for the fixed period). You can fix your rate for 1 to 5 years. And your repayments won't change during this time.
• Turn into variable rates anyway. Once the fixed period ends you're back on a variable rate, but often this is higher than the advertised variable rate.
• Are harder to break. Refinancing or repaying a fixed rate loan early comes with a break fee. This can cost thousands of dollars.

"I'm team variable interest rate all the way. I don't fix my rate and I don't bother with a split rate either. For me, the value of a variable rate loan's flexibility and getting the full benefit of an offset account is so important. I can refinance whenever I need without penalty and if I decide to sell or make a big change that requires a new loan, it's so much easier."

Richard Whitten

Senior Money Editor

The lowest variable rate vs the lowest fixed rate loan over time

This graph shows how the lowest variable rate loan has compared to the lowest fixed rate loan over the last few years.

Fixed vs variable rates: What are the differences?

Frequently asked questions about variable rate home loans

• What is the best variable home loan rate in Australia?

  Interest rates have changed a lot over the last couple of years and they could change over the next few months as well. While good interest rates are important, remember to look at what other features and fees come with the loan.

• Why are fixed rates sometimes lower than variable rates?

  While variable rate home loans are typically lower than fixed rates, situations arise where fixed rates become lower. This usually happens when lenders anticipate that variable rates will remain low for an extended period, or if the market believes the official cash rate will fall in the future, making fixed rates less expensive.

• Is a variable rate home loan better than a fixed rate home loan?

  The choice between a fixed and variable rate home loan depends on individual circumstances.

  Variable rates offer flexibility, often come with lower fees, and features like offset accounts, and are easier to refinance. Fixed rates provide repayment stability and protection against rising interest rates, but typically have less flexibility regarding extra repayments, offset accounts, and incur break fees for early exit.

  Use our repayment calculator and speak to a mortgage broker if you want more information on what the right rate is for you.

• How do I know if variable rates are going to rise or fall?

  Lenders are free to move your variable interest rate up or down whenever they want. In practice, lenders move rates in response to wider market and economic conditions.

  While you can't really predict rate changes perfectly, it is possible to get a good sense of which direction rates are moving in.

  The Reserve Bank of Australia (RBA) sets the official cash rate each month. This is a benchmark for lenders to set interest rates on variable rate home loans.

  The RBA lowers interest rates to stimulate economic growth and encourage spending. When inflation is high, the RBA raises rates to cool spending and drive prices down.

• How often can variable interest rates change in Australia?

  Variable interest rates in Australia can change at any time, moving either up or down, based on market conditions and lender decisions.

• Which bank has the best variable rate?

  Credit unions and online lenders have the lowest variable rate home loans. And for most borrowers, lowest rate = best.

  But the big banks have really good apps and in-branch service. That can be a very big benefit.

• What types of variable rate home loans do lenders offer?

  Most lenders offer multiple variable rate home loans.

  • Basic variable home loans. A basic variable loan has a lower rate than a lender's other products (usually) and doesn't come with an offset account. These loans are all about the low rate.
  • Introductory discount home loans. These loans (sometimes called honeymoon home loans) are often the lowest variable rate loans a lender offers. But after the initial discounted period, the rate will revert to a higher rate. That's usually a good time to switch to a better loan.
  • Package home loans. These loans let you combine your mortgage with an offset account plus a credit card or other financial products. In exchange, you get discounted fees on the products and the convenience of having all your banking in one place. The downside? You pay an annual package fee of several hundred dollars.
  • Standard variable home loans. Standard variable rates are a bit of a throwback. These are the benchmark variable rates used for home loans with the Big Four banks and some other lenders. Most lenders discount the actual rate you get or will recommend a similar loan with a lower rate.

• When will mortgage rates go down in Australia?

  It's hard to predict when mortgage rates will go down again in Australia. The RBA raised the cash rate three times in 2026, in February, March and May, taking it to 4.35%, and has held it there since. This followed 3 interest rate cuts in 2025. It's unclear at the moment whether rates will continue to rise or whether they could even fall again later this year.

• What is a good interest rate on a variable rate home loan?

  A "good" interest rate will really depend on the loan you need for your circumstances. Right now, a mid-5% interest rate is still competitive. The lowest variable interest rate on the Finder website at the moment is 5.69%, but not every borrower will necessarily be right for the lowest rate.

• What is the direct relationship between the RBA cash rate and variable home loan rates?

  Variable home loan rates in Australia are largely pegged to the Reserve Bank of Australia (RBA)'s official cash rate. Changes in the RBA cash rate often lead to corresponding adjustments in variable home loan rates, although banks don't always pass on every change in full.

• What are the potential drawbacks or risks of a variable rate home loan?

  The primary drawback of a variable rate home loan is the uncertainty of repayment amounts. As interest rates can change at any time, your regular repayments may increase if rates go up, potentially impacting your budget and financial planning.

• Can I make extra repayments on a variable rate home loan without penalty?

  Yes, variable rate home loans generally offer greater flexibility, allowing borrowers to make extra repayments without incurring penalties. This feature can help you pay off your loan faster and save on interest.

• Is it possible to switch from a variable rate home loan to a fixed rate home loan?

  Yes, it is generally possible to switch from a variable rate home loan to a fixed rate home loan, typically by refinancing your existing mortgage. Variable rate loans are often easier to refinance compared to fixed-rate loans, which may involve break fees.

• Are there specific fees associated with variable rate home loans that I should be aware of?

  Variable rate home loans often come with lower fees than their fixed-rate counterparts. While some competitive variable loans may have no application, ongoing, or exit fees, it's important to check the specific product disclosure statement as some may still carry certain charges. Variable loans typically do not have 'break fees' for exiting early, unlike fixed-rate loans.

• What features are typically included with a variable rate home loan, apart from the changing rate?

  Beyond the fluctuating interest rate, variable home loans commonly include features such as redraw facilities, which allow you to access extra repayments you've made, and offset accounts, which can reduce the interest you pay by linking your savings to your loan. They also often provide flexible repayment options.

Finding the best variable rate home loan for you

Every month, our home loan experts analyse more than 50 home loan rates from our database to find our best home loan picks. We only select home loans that are suitable for a typical borrower, so we don't include loans that require enormous deposits or have extra eligibility requirements.

We then rank these loans, with a scoring system that awards a higher score for loans with the lowest rates and fewest fees.

All our picks are from lenders with whom Finder has a commercial partnership. The best home loan looks a little different for every borrower and our picks may not be the best option for your situation.

Why you can trust Finder's research

100+ rates compared

Analysis from the experts

Picks updated monthly

How we calculate Home Loan Finder Scores

Read full methodology

What different scores mean

9+

Excellent

These variable rate home loans offer low costs, coupled with a host of features, giving the best overall value.

7+

Great

These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.

5+

Standard

Usually the home loans would offer above average rates. They may still include some competitive features.

0+

Basic

Higher costs and/or fewer features.

What is Finder Score?

The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.

To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.

Read the full breakdown

To make sure you get accurate and helpful information, this guide has been edited by Rebecca Pike and reviewed by James Millard, a member of Finder's Editorial Review Board.

Written by

Richard Whitten

Senior Money Editor

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Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

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Richard has written 755 Finder guides across topics including:

• Home loans
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