Why should you compare mortgage rates?

The right mortgage rates can make an enormous difference to your finances. If you're applying for your first home loan, or refinancing an existing mortgage, it's important to compare mortgage rates. Your mortgage rate may help you to save money, clear your debt faster, or make your home equity work for you.

It's also important to look at more than just the rate when comparing home loans. Comparing mortgage rates, fees, features and benefits of home loans from different lenders can help you work out which options offer the most value for your budget.

mortgage rates

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3.27%

Variable

3.28%

HSBC

$1.5k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

4.00

/ 5
More details

3.09%

Variable

3.09%

UBank

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.27

/ 5
More details

2.99%

Fixed - 3 years

3.45%

UBank

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.42

/ 5
More details

3.09%

Variable

3.05%

Athena Home Loans

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.15

/ 5
More details

3.59%

Variable

3.24%

Athena Home Loans

$898

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.10

/ 5
More details

3.49%

Variable

3.49%

UBank

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.65

/ 5
More details

3.59%

Variable

3.49%

Athena Home Loans

$898

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.10

/ 5
More details

3.49%

Variable

3.45%

Athena Home Loans

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.53

/ 5
More details

3.49%

Fixed - 5 years

3.85%

UBank

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.05

/ 5
More details

3.19%

Fixed - 5 years

3.44%

UBank

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.51

/ 5
More details

2.97%

Variable

2.99%

Well Home Loans

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.54

/ 5
More details

2.88%

Variable

2.90%

loans.com.au

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.35

/ 5
More details

3.39%

Variable

3.39%

Hume Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.95

/ 5
More details

3.19%

Variable

3.22%

Mortgage House

$1.5k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

4.31

/ 5
More details

3.38%

Variable

3.52%

Virgin Money

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.00

/ 5
More details

3.32%

Variable

3.37%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.88

/ 5
More details

3.15%

Variable

3.17%

State Custodians

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.45

/ 5
More details

3.36%

Variable

3.39%

IMB Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.87

/ 5
More details

3.19%

Fixed - 3 years

3.74%

Heritage Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.96

/ 5
More details

3.79%

Variable

3.79%

Hume Bank

$1.5k

Redraw facility
Offset Account
Borrow up to 85%
Extra Repayments
Interest Only
Owner Occupied

3.27

/ 5
More details

Learn more about home loans

How do mortgage rates affect my home loan?

Your mortgage rate will determine the cost of interest on your home loan. The higher your rate, the more you’ll have to pay in interest charges.

When you compare mortgage rates, you can see how much you can save in interest charges by choosing a home loan with a lower rate.

For example, imagine you have 20 years left on your mortgage. You refinance from an interest rate of 4.50% to 4.00%. Here's how much you could save, based on the size of your loan:

  $300,000 $500,000 $700,000
Total repayments at 4.5% $455,508 $759,179 $1,062,851
Total repayments at 4.0% $436,306 $727,176 $1,018,047
Potential interest savings $19,202 $32,003 $44,804

Above hypothetical examples are for illustrative purposes only. Calculations source: MoneySmart

What are variable mortgage rates?

Variable mortgage rates may rise and fall over the lifetime of a loan. For example, when the RBA raises or lowers the nation’s cash rate, lenders often raise or lower their mortgage rates.

If your lender cuts interest rates, you can pay less per month for your home loan. This could leave you with some breathing room in your monthly budget. You could also choose to keep making the same repayments. This can help clear your debt faster so you can pay even less interest.

But if interest rates rise, you may have to pay more for your mortgage. This could cost you more from month to month, and put you at risk of mortgage stress.

What is mortgage stress?

If more than one third of your pre-tax household income goes towards mortgage payments, you may be in mortgage stress. Once you’ve paid for your home loan, your day-to-day essentials and other expenses, you won’t have much money left over. 

Before you apply for a mortgage, ask yourself if you could still afford it if rates were to rise. Use a mortgage calculator to work out what you’d pay today, and what you’d pay if rates rose by 1, 2 or 3 percentage points. If the payments would make up more than a third of your income, you may be at risk of mortgage stress.

What are fixed mortgage rates?

Fixing your interest rate will keep your interest charges the same for a few years. This can help keep your budgeting simple.

If variable rates rise, you’ll keep paying the same fixed rate. This can help protect you from mortgage stress for a time. However, if variable rates fall, you won't get to save on interest charges.

Refinancing away from a fixed rate home loan can mean paying high break costs. You may not enjoy as much financial flexibility from a fixed rate home loan.

What are split mortgage rates?

In a split rate mortgage, a fixed interest rate is charged on part of your loan, and a variable interest rate is charged on the rest.

The fixed percentage can help keep your mortgage repayments stable if rates rise, and offer some protection from mortgage stress. The variable percentage can let you enjoy some savings if rates fall.

What is a comparison rate?

When you compare mortgages, you may discover that a home loan with a low interest rate and high fees can cost more than a loan with a high rate and low fees. 

A home loan’s comparison rate shows the mortgage’s approximate total cost, including interest and standard fees.

Lenders are required to provide home loan comparison rates to help make it easier to compare the total cost of different home loans side by side.

Remember that a home loan's comparison rate may not include every cost. For example, some loans charge extra fees for using the loan’s optional features.

How does your mortgage rate and loan term affect your home loan’s cost?

The longer you take to pay off a loan, the more you’ll pay in interest. Even if you choose a low mortgage rate, choosing a long loan term could cost you more in total. 

Most home loans start with a term of 25 or 30 years, though shorter and longer options may be available.

The longer your home loan’s term, the more repayments you’ll need to make. Each repayment will be for a smaller percentage of the loan's principal. While each of these payments may be more affordable in the short term, you may pay more in total interest.

On the other hand, a shorter home loan term means making fewer repayments. Each repayment will be for a larger percentage of the loan's principal. These payments may be more expensive in the short term, but you may pay less in total interest.

  Monthly repayments Total interest charged Total loan cost
$500,000 mortgage at 4% interest on a 25 year term $2639 $291,755 $791,755
$500,000 mortgage at 4% interest on a 30 year term $2387 $359,348 $859,348

Above hypothetical examples are for illustrative purposes only. Calculations source: MoneySmart

Which mortgage rates suit different borrowers?

Your mortgage rate may in part depend on what type of borrower you are. Generally, the higher the risk that you’ll default on your loan, the higher the rate you’ll be charged. However, if you can show that you’re a responsible borrower, you may be offered a lower interest rate.

If you plan to live in the property as an owner-occupier, you may be offered a lower rate. Most lenders feel that owner-occupiers are less likely to default on their loans, as this would mean losing their home.

Lenders often feel that investors are more likely to default, and charge higher rates on investment loans. Plus, extra government regulations often apply to investment home loans.

Some first home buyers use fixed rate mortgages to keep their repayments stable while they build up their equity. However, these fixed rates will eventually revert to the lender's standard variable rates, which may cost more.

If you’re refinancing your current home loan, the more equity you have in your current property, the lower your new lender's risk, and the lower the rates they may offer.

What is a honeymoon rate?

A honeymoon rate is not the interest rate of a home loan for newlyweds. Instead, it’s a nickname for introductory interest rates. Lenders use these discounted interest rates to attract new customers. 

While honeymoon rates can mean cheaper home loan payments, they won’t last forever. When the introductory period expires, you’ll revert to the lender’s standard variable rate, which may be more expensive.

Can I get better mortgage rates from banks or non-banks?

When comparing mortgages from banks and non-banks, it's important to consider the value they offer, not just the rates.

Some banks bundle extra features, benefits and financial products with their home loans, such as savings and transaction accounts, credit cards, and more.

Some non-bank lenders offer competitive mortgage rates, as well as flexible lending terms to better suit different households. However, these lenders may not be able to offer the extra features and services that are available from certain banks.

Some non-bank lenders are online only. With fewer overheads, these lenders can often offer lower home loan interest rates. But while you can contact these banks online or over the phone, you can’t visit a branch to go through your home loan's paperwork in person.

Does an offset account or redraw facility affect your mortgage rate?

Even if your lender offers good mortgage rates, there may be home loan features to help you save money and enjoy more benefits. 

Some lenders let you pay extra onto your home loan. Extra repayments can help to clear your home loan balance faster, and reduce your interest charges. However, the more money you put toward your home loan, the less savings you may have available.

A home loan with a redraw facility will allow you to take extra repayments back out of your home loan, subject to terms and conditions. This can be handy if you need this money back in the bank.

Another option is to use an offset account. This is a savings or transaction bank account that's linked to your home loan. You can quickly transfer money to or from an offset account as you need it.

Money in an offset account is included when calculating your interest charges, which can help you pay less interest.

For example, imagine you have a home loan for $500,000, and have paid off $200,000 so far. You also have $15,000 in your offset account. Your lender will calculate your interest charges as if you owed $285,000 rather than $300,000. This means your mortgage repayments will be slightly smaller.

Keep in mind that while a flexible offset account or a redraw facility can help you save money on interest payments, these home loans may charge higher interest rates or fees, so they may cost more to start with.

How to shop for mortgage rates

While it's important to compare mortgage rates when selecting a home loan, there's plenty more to consider:

  • Are you applying for a new home loan, or refinancing an existing mortgage?
  • Are you an owner occupier or an investor?
  • Would you prefer a variable, fixed, or split mortgage rate?
  • What are the fees? Have you looked at the comparison rate?
  • How long is your loan term? Can you afford the repayments on your income?
  • What mortgage features do you want? Can you get these, plus an affordable mortgage rate, from a bank or non-bank lender?

RateCity puts information on a wide variety of home loans all in one place, so you can quickly and efficiently compare mortgage rates, features and benefits, and narrow down your shortlist of potential loans to only those that best fit your financial situation.

Frequently asked questions

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

What is the difference between fixed, variable and split rates?

Fixed rate

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

How do you determine which home loan rates/products I’m shown?

When you check your home loan rate, you’ll supply some basic information about your current loan, including:

  • the amount owing on your mortgage
  • the value of your property
  • your current interest rate
  • name of existing lender
  • property address

We’ll compare this information to the home loan options in the RateCity database, and show you which home loan products you may be eligible to apply for.

What is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Does the Rate Guarantee apply to discounted interest rate offers, such as honeymoon rates?

No. Temporary discounts to home loan interest rates will expire after a limited time, so they aren’t valid for comparing home loans as part of the Rate Guarantee.

However, if your home loan has been discounted from the lender’s standard rate on a permanent basis, you can check if we can find an even lower rate that could apply to you.

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

What is the best interest rate for a mortgage?

The fastest way to find out what the lowest interest rates on the market are is to use a comparison website.

While a low interest rate is highly preferable, it is not the only factor that will determine whether a particular loan is right for you.

Loans with low interest rates can often include hidden catches, such as high fees or a period of low rates which jumps up after the introductory period has ended.

To work out the best value for money, have a look at a loan’s comparison rate and read the fine print to get across all the fees and charges that you could be theoretically charged over the life of the loan.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

How do I calculate monthly mortgage repayments?

Work out your mortgage repayments using a home loan calculator that takes into account your deposit size, property value and interest rate. This is divided by the loan term you choose (for example, there are 360 months in a 30-year mortgage) to determine the monthly repayments over this time frame.

Over the course of your loan, your monthly repayment amount will be affected by changes to your interest rate, plus any circumstances where you opt to pay interest-only for a period of time, instead of principal and interest.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

What is an interest-only loan? (include how do I work out interest-only loan repayments)

An ‘interest-only’ loan is a loan where the borrower is only required to pay back the interest on the loan. Typically, banks will only let lenders do this for a fixed period of time – often five years – however some lenders will be happy to extend this.

Interest-only loans are popular with investors who aren’t keen on putting a lot of capital into their investment property. It is also a handy feature for people who need to reduce their mortgage repayments for a short period of time while they are travelling overseas, or taking time off to look after a new family member, for example.

While moving on to interest-only will make your monthly repayments cheaper, ultimately, you will end up paying your bank thousands of dollars extra in interest to make up for the time where you weren’t paying off the principal.

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

The fine print – what are the eligibility criteria?

This competition is only available to Australian residents who are over 18 and check their home loan interest rate at RateCity. However, you are not required to refinance your home loan or apply for any financial products.

You can still enter if you don’t have a home loan yet – enter how much you plan to borrow and the details of the property you’re considering, and we’ll compare mortgage offers that may suit your needs and estimate how much you could save compared to a loan with an average interest rate. 

What is a standard variable rate (SVR)?

The standard variable rate (SVR) is the interest rate a lender applies to their standard home loan. It is a variable interest rate which is normally used as a benchmark from which they price their other variable rate home loan products.

A standard variable rate home loan typically includes most, if not all the features the lender has on offer, such as an offset account, but it often comes with a higher interest rate attached than their most ‘basic’ product on offer (usually referred to as their basic variable rate mortgage).

What is principal and interest'?

‘Principal and interest’ loans are the most common type of home loans on the market. The principal part of the loan is the initial sum lent to the customer and the interest is the money paid on top of this, at the agreed interest rate, until the end of the loan.

By reducing the principal amount, the total of interest charged will also become smaller until eventually the debt is paid off in full.

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

Are bad credit home loans dangerous?

Bad credit home loans can be dangerous if the borrower signs up for a loan they’ll struggle to repay. This might occur if the borrower takes out a mortgage at the limit of their financial capacity, especially if they have some combination of a low income, an insecure job and poor savings habits.

Bad credit home loans can also be dangerous if the borrower buys a home in a stagnant or falling market – because if the home has to be sold, they might be left with ‘negative equity’ (where the home is worth less than the mortgage).

That said, bad credit home loans can work out well if the borrower is able to repay the mortgage – for example, if they borrow conservatively, have a decent income, a secure job and good savings habits. Another good sign is if the borrower buys a property in a market that is likely to rise over the long term.