The average home loan interest rate

How does the interest rate on your mortgage compare to Australia’s average home loan interest rate?

Choosing a home loan is probably the most important financial decision you will ever make. A home loan will cost you hundreds of thousands of dollars and affect your financial future for years to come, so it’s essential to make sure you get the best deal available.

The interest rate is a crucial factor in determining the true value of a home loan, and finding a lower rate can save you tens of thousands of dollars over the life of the loan. So let’s look at the average home loan interest rate in Australia and how that compares to any loans you may be considering.

Compare some of today's home loan rates

Rates last updated February 22nd, 2017.

Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Owner Occupier)

Comparison rate increases by 0.03% | Interest rate increases by 0.25%

February 13th, 2017

Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Owner Occupier)

Comparative rate increases by 0.04% | Interest rate increases by 0.25%

February 13th, 2017

HSBC Home Value Loan - Resident Owner Occupier only

Application fee waived for Resident Owner Occupier only.

February 15th, 2017

View latest updates

Jodie Humphries Jodie
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Loan purpose
Offset account
Loan type
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Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
HSBC Home Value Loan - Resident Owner Occupier only
Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.
3.75% 3.77% $0 $0 p.a. 90% Go to site More info
loans.com.au Essentials - Variable (Owner Occupier, P&I)
A low-interest rate loan suited for purchases and refinances with no application or ongoing fees.
3.59% 3.61% $0 $0 p.a. 80% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.59% 4.42% $0 $375 p.a. 85% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier)
A fixed rate package loan with flexible repayments options. $1,500 cashback offer available, terms and conditions apply.
3.98% 4.92% $0 $395 p.a. 95% Go to site More info
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier)
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.74% 4.12% $0 $395 p.a. 95% Go to site More info
IMB Budget Home Loan - LVR <=90% (Owner Occupier)
A competitive budget rate without any unwanted bells and whistles.
3.87% 3.92% $445 $0 p.a. 90% Go to site More info
Beyond Bank Low Rate Special Home Loan
A special low variable rate for Owner Occupier with 100% offset account and no application or ongoing fees.
3.73% 3.73% $0 $0 p.a. 70% Go to site More info
loans.com.au Offset Variable - Up to 80% LVR (Owner Occupier P&I)
Take advantage a 100% offset account along with no annual or application fee.
3.67% 3.69% $0 $0 p.a. 80% Go to site More info
Switzer Home Loan
No upfront or ongoing fees and a competitive variable rate for owner occupiers.
3.89% 3.89% $0 $0 p.a. 90% Go to site More info
CUA Fresh Start Basic Variable Home Loan - Owner Occupier
A basic mortgage with flexible repayments options.
3.89% 3.94% $600 $0 p.a. 90% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier Special Rate)
A limited time 2 year fixed rate for owner occupiers. Conditions apply.
3.89% 4.79% $0 $0 p.a. 95% Go to site More info
Bank Australia Basic Home Loan - Variable (Owner Occupier)
A competitive variable that allows borrowers to borrow a minimum of $100,000 with a $0 ongoing fee.
3.79% 3.83% $0 $0 p.a. 80% Go to site More info
ING  DIRECT Orange Advantage Loan - $150,000+ (LVR <= 80% Owner Occupier)
A fully featured home loan with an offset account and discounts available.
3.89% 4.11% $0 $199 p.a. 80% Go to site More info
3.85% 4.26% $0 $395 p.a. 80% Go to site More info
Auswide Bank Home Loan Plus with Freedom Package - Special Package Discount LVR <= 90% (Owner Occupier) P&I
A high maximum LVR home loan with redraw facility and additional payments.
3.79% 4.18% $0 $395 p.a. 90% Go to site More info

Why do I need to know the average home loan interest rate?

When you borrow money to finance the purchase of a home, banks don’t just hand the funds out for free. Not only will you have to pay back the money you borrow, but you’ll also have to repay the interest that accumulates on that principal amount.

Your lender sets the rate at which interest accumulates on the money you borrow. There can be substantial interest rate differences from one lender to the next, and they have a huge impact on the overall cost of your mortgage.

When comparing home loans, it is often quite difficult to wrap your head around all the facts and figures available to determine which loan offers the best value for money. But checking out the current average home loan interest rate on this page gives you a quick and easy way to compare rates for different mortgages on the market at any given time.

This information can then be used to help you make an informed decision about which home loan is right for you.

How much difference does a higher or lower interest rate make?

Even a slight variation in interest rates can make thousands of dollars of difference over the life of a home loan. For example, let’s consider a $500,000 home loan with principal and interest repayments and a loan term of 25 years. The table below shows the overall cost of this loan with an interest rate of 3.75% p.a. and 4.00% p.a.

Loan ALoan B
Interest rate4.00% p.a.3.75% p.a.
Loan amount$500,000$500,000
Monthly repayment amount$2,639.18$2,570.66
Total cost of loan$791,755.26$771,196.80
Total interest paid$291,755.26$271,196.80

As you can see, the 0.25% p.a. lower interest rate of Loan B results in a saving of more than $20,000 across the 25-year loan term. That clearly demonstrates just how important it is to get a competitive interest rate. Use our home loan repayment calculator to see how a higher or lower interest rate could affect your mortgage repayments.

What other factors affect home loan affordability?

While interest rates are undoubtedly important, they’re not the only factor that determines whether a home loan meets your needs. Other issues to consider include:

  • Fees. These include application fees, loan establishment fees, legal fees, ongoing fees, additional repayment fees and more.
  • Loan to valuation ratio (LVR). This refers to the amount of money you are allowed to borrow relative to the value of the property you want to buy. It has a direct affect on the amount of deposit you will need to have saved in order to qualify for a loan.
  • Repayment flexibility. As well as choosing a repayment schedule to suit your budget, some loans also allow you to make additional repayments at any time so you can pay your loan off quicker.
  • Loan features. Some features you might like to take advantage of include a redraw facility to access your extra repayments, and an offset account to reduce the amount of interest you need to pay.

Compare your mortgage interest rate with the average home loan interest rate in Australia to determine whether your home loan offers value for money. Just remember to consider a host of other features and factors before choosing the loan that’s right for you.

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Related Posts

HSBC Home Value Loan - Resident Owner Occupier only

Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.

loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.59%p.a.
comp rate of 3.61%p.a.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)

Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier)

Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.

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