Current home loan interest rates in Australia

What are the current average home loan interest rates in Australia?

The table below shows the average interest rate for variable and fixed rate home loans in Australia, based on Finder's database of thousands of home loan products. It also shows the lowest rates available in our database to highlight how much you could save by shopping around.

*The lowest rate may not be a suitable rate for all borrower types.

How does Finder calculate the average rate?

Finder maintains a home loan database that includes thousands of interest rates from lenders big and small. Our data covers the majority of the home loan market.

Our average interest rate figures are updated monthly. To get the average variable rate figure we take the average of all interest rates for loans that meet the following criteria:

• For owner-occupiers
• Have principal-and-interest repayments
• Have maximum insured LVRs of 80% or higher (available for borrowers with at least 20% deposits)

This ensures our average rates reflect the types of loans that a typical borrower would apply for.

If you want the current rates for different home loan types, check out the following pages:

• Fixed rate home loans
• Variable rate home loans
• Big Four bank interest rates
• Investment loan interest rates

How do Australian home loan interest rates work?

Before comparing loans, it helps to understand the key terms and structures that determine how your loan works and what it costs.

Variable vs fixed rates

• Variable interest rate.

A variable rate can move up or down over the life of your loan, generally in response to changes in the RBA's official cash rate and other market forces. This means your repayments can change.

• Fixed interest rate.

A fixed rate is locked in for a set period, typically between one and five years. This gives you certainty about your repayment amount for the fixed term. At the end of the term, your loan will usually switch to a higher variable rate unless you refix or refinance.

• Split rate.

A split loan allows you to fix a portion of your mortgage and keep the remainder on a variable rate, giving you a mix of certainty and flexibility.

Interest rate vs comparison rate

The interest rate is the percentage you are charged on the loan balance. The comparison rate is a more complete measure of a loan's cost. It includes the interest rate plus most upfront and ongoing fees, expressed as a single percentage. Lenders are legally required to show a comparison rate, making it easier to compare the true cost of different loans.

What factors determine home loan interest rates?

Multiple factors influence the interest rates set by lenders. While they are closely linked to the Reserve Bank of Australia (RBA), lenders also price their loans based on their own funding costs and business strategy.

The Reserve Bank of Australia

The RBA sets Australia's official cash rate, which is the interest rate at which banks lend to each other overnight.

This acts as a benchmark for the entire financial system. When the cash rate rises, lenders' borrowing costs increase, and they typically pass this on to customers through higher mortgage rates. When the cash rate falls, rates tend to drop.

The RBA adjusts the cash rate based on several economic factors:

• Inflation. The RBA aims to keep inflation within a 2-3% target range. If inflation is too high, it will raise the cash rate to cool spending. If it's too low, it may cut the rate to stimulate the economy.
• The economy. Lower rates can encourage borrowing and spending to boost slow economic growth, while higher rates can be used to manage an overheating economy.
• Global markets. Decisions made by other central banks, particularly the US Federal Reserve, can influence the RBA's policy as global economies are interconnected.

Banks and lenders

While the RBA sets the benchmark, lenders determine the final rate you pay. They might offer lower rates to attract new customers and grow their market share, or they might keep rates higher to increase their profit margins. Your personal circumstances, such as your deposit size (LVR), credit history and whether the loan is for an investment or your own home, will also affect the rate you are offered.

What were the highest and lowest interest rates in Australian history?

For over two decades, double-digit home loan interest rates were normal in Australia. Rates first exceeded 10% in 1974 and remained there for over 20 years, reaching a peak of 17% in 1990. This period caused significant financial stress and a high number of bankruptcies.

By June 1994, rates had fallen to 8.75%. Since the mid-90s, interest rates have generally hovered between 4% and 8%. The two major exceptions were a brief spike to 9.6% in 2008 during the Global Financial Crisis and the record lows below 2% following the COVID-19 pandemic.

The graph below shows the lowest variable and fixed rates available on the market each month, demonstrating how much rates can change over time.

If you just want to see the cheapest loans, check out our lowest home loan rates page.

Check out more detailed mortgage data on our home loans statistics page

How much can a lower interest rate save you?

Even a small difference in your interest rate can save you tens of thousands of dollars over the life of your loan.

The table below compares two $500,000 home loans over a 30-year term with principal and interest repayments. The only difference is a 0.50% variation in the interest rate.

The lower interest rate of Loan A results in a saving of more than $58,000 over 30 years.

Use our home loan repayment calculator to see how a higher or lower interest rate could affect your mortgage repayments.

Frequently asked questions about home loan interest rates in Australia

• What is a good home loan interest rate in Australia?

  A "good" interest rate is one that is lower than the market average and competitive for your specific circumstances.

  As of May 2026, the average variable rate is 6.84%. A competitive or good rate would be anything significantly below that. This will depend on what kind of loan you need, how much deposit you have and your risk profile.

  The lowest rates are typically reserved for borrowers with large deposits (20% or more) and a strong credit history.

• Why is my interest rate higher than the advertised rate?

  Lenders often advertise their lowest possible "headline" rate, which may only be available to ideal applicants (e.g., owner-occupiers with a loan-to-value ratio of 60% or less). The rate you are offered depends on factors like your deposit size, your credit score, the loan purpose (owner-occupier vs investor) and the type of loan (principal and interest vs interest-only).

• What will happen to interest rates in Australia?

  Experts are often divided on future interest rate movements. The Reserve Bank of Australia (RBA) adjusts the official cash rate based on economic data, primarily inflation and employment figures. If inflation remains above the RBA's 2-3% target, rates are more likely to rise or stay high. If inflation falls and economic growth slows, the RBA may consider cutting rates. It is best to monitor the RBA's monthly statements and economic forecasts for the most current outlook.

• How often do variable interest rates change?

  A lender can change its variable interest rate at any time, but changes most commonly occur in the days following a change to the RBA's official cash rate. Some lenders may also adjust rates independently of the RBA to manage their funding costs or competitive position.

To make sure you get accurate and helpful information, this guide has been reviewed by John Pidgeon, a member of Finder's Editorial Review Board.

Written by

Richard Whitten

Senior Money Editor

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

Richard's expertise

Richard has written 725 Finder guides across topics including:

• Home loans
• Credit cards
• Personal finance
• Money-saving tips