Lenders continue to chip away at mortgage rates, with some pushing headline rates below the 2% mark. While the volume of cuts has slowed down compared to earlier in the year, most of the changes that flowed through in August were once again made to fixed rates. At the time of writing, Homestar offers 1.98% p.a. (2.51% p.a. comparison rate*) for 1-year terms, Community First Credit Union offers 1.99% p.a. (3.25% p.a. comparison rate*) on 2-year terms, and Bank First offers 1.99% p.a. (3.11% p.a. comparison rate*) on 3-year terms.
Things were much quieter on the variable rate front, though there were still pockets of activity, especially among lenders with already sharp rates who opted to improve them further. For example, Homestar made cuts of up to 20 bp, bringing variable rates down to 2.29% p.a. (2.34% p.a. comparison rate*) for owner occupiers with an LVR of 70%.
We’ve also begun to see more lenders making accommodations for borrowers with lower loan to value ratios (LVR), likely in a bid to attract low-risk refinancers. Last month, neobank 86 400 introduced tiered pricing which offers customers with a 40% deposit rates as low as 2.59% p.a. (2.87% p.a. comparison rate*).
Meanwhile, online lender Athena Home Loans rolled out a dynamic pricing model known as AcceleRates, which lets borrowers automatically access cheaper rates as they pay down their loan. Rates begin at 2.54% p.a. (2.46% p.a. comparison rate*) for owner occupiers with an LVR of between 70% and 80%, and gradually decrease before settling at 2.39% p.a. (2.39% p.a. comparison rate*) when the LVR dips below 60%.
At the time of writing, the average variable home loan rate (OO, P&I) among providers we track is 3.36% p.a. Meanwhile, the average 1-year fixed home loan rate (OO, P&I) in our database currently sits at 2.56% p.a.
To find out how interest rates are tracking in other banking products for September check out our snapshot for Savings Accounts Interest Rates or Term Deposit Interest Rates.
Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
Sorted by:
Mozo Order
2.59% p.a. variable
2.62% p.a.
LVR<80%, Owner Occupier, Principal & Interest
2.59% p.a. variable
2.62% p.a.
Enjoy no ongoing monthly or annual account-keeping fees. Unlimited additional repayments. Redraw facility available. If you choose to round up your Orange Everyday, every card purchase will help to directly reduce your outstanding home loan balance.
1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
Owner Occupier, Principal & Interest, <80% LVR
1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required.
2.68% p.a. variable
2.69% p.a.
LVR<80%, Owner Occupier, Principal & Interest
2.68% p.a. variable
2.69% p.a.
No monthly account keeping fee, no ongoing annual fee and no loan establishment fee on new lending of $150,000 or more. Get a $2,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan of $250k+. T&Cs & eligibility criteria apply.
2.09% p.a.
fixed 2 years
2.98% p.a.
Owner Occupier, Principal & Interest, LVR <80%
2.09% p.a.
fixed 2 years
2.98% p.a.
Have the security of a fixed rate for 2 years with the option to split with one of the HSBC variable Home Loans. No ongoing monthly service fees or annual fees. Mozo Experts Choice Fixed Home Loan 2020^
2.39% p.a. variableApply now to get this rate from 30 Sep
2.39% p.a.Apply now to get this rate from 30 Sep
<60% LVR, Owner Occupier, Principal & Interest
2.39% p.a. variableApply now to get this rate from 30 Sep
2.39% p.a.Apply now to get this rate from 30 Sep
Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
2.59% p.a. variable
3.00% p.a.
Owner Occupier, Principal & Interest, LVR <80%
2.59% p.a. variable
3.00% p.a.
Enjoy a variable rate with the AMP Bank Professional Package Home Loan. 100% offset accounts available with full transaction access. Handy redraw facility available upon request. Minimum 20% deposit required. Other rates available for interest only option. Pre-qualify today.
2.54% p.a. variable
2.55% p.a.
Owner Occupier, Principal & Interest, 60-80% LVR
2.54% p.a. variable
2.55% p.a.
Get smart, flexible and cost-effective rates from homeloans.com.au. Complimentary 100% offset account and free online redraw. Unlimited additional repayments. Zero application or annual fees. Fast online application process.
2.18% p.a.
fixed 2 years
3.72% p.a.
Owner Occupier, Principal & Interest
2.18% p.a.
fixed 2 years
3.72% p.a.
No ongoing fees. Ability to split your loan between fixed and variable. $2,000 cashback offer for investor & owner occupied home loans over $250k with LVR ≤80% when refinancing to Newcastle Permanent. Limited time offer, T&Cs apply.
2.64% p.a. variable
2.98% p.a.
LVR<80%, Owner Occupier, Principal & Interest
2.64% p.a. variable
2.98% p.a.
No monthly fees. Low $299 annual fee. 100% interest offset available and unlimited additional repayment. If you choose to round up your Orange Everyday, every card purchase will help to directly reduce your outstanding home loan balance.
2.49% p.a. variable
2.49% p.a.
Owner Occupier, Principal & Interest
2.49% p.a. variable
2.49% p.a.
Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.
2.59% p.a. variable
2.76% p.a.
Owner Occupier, Principal & Interest, <70% LVR
2.59% p.a. variable
2.76% p.a.
An ongoing low variable interest rate with free redraw, flexible repayment options and one free valuation. Discounted Economy variable rate available for owner occupier lending with max LVR of 70%.
2.54% p.a. variableApply now to get this rate from 30 Sep
2.46% p.a.Apply now to get this rate from 30 Sep
70-80% LVR, Owner Occupier, Principal & Interest
2.54% p.a. variableApply now to get this rate from 30 Sep
2.46% p.a.Apply now to get this rate from 30 Sep
Fast online application with no fees. Free extra repayments and redraw facility. Min 20% deposit. To reward borrowers for paying down their home loan, Athena will now automatically lower the rate as the loan is paid down. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
2.48% p.a. variable
2.50% p.a.
Owner Occupier, Principal & Interest
2.48% p.a. variable
2.50% p.a.
A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.
2.29% p.a. variable
2.32% p.a.
Owner Occupier, Principal & Interest
2.29% p.a. variable
2.32% p.a.
Low Cost Home Loan 2020 winner.^ A home loan packed with all the essentials and offering up to $1500 cashback and no ongoing fees. No Construction loans.
2.59% p.a. variable
2.63% p.a.
Owner Occupier, Principal & Interest
2.59% p.a. variable
2.63% p.a.
Enjoy a great low rate with no ongoing fees. Ability to split your loan between fixed and variable. 100% offset account. $2,000 cashback offer for investor & owner occupied home loans over $250k with LVR ≤80% when refinancing to Newcastle Permanent. Limited time offer, T&Cs apply.
2.89% p.a. variable
2.89% p.a.
Owner Occupier, Principal & Interest, LVR<80%
2.89% p.a. variable
2.89% p.a.
The Low Cost Home Loan Package features low variable rates from 2.89% (2.89% comparison rate*) for owner-occupiers making principle and interest repayments, and has no application, legal or settlement fees.
2.61% p.a. variable
2.67% p.a.
LVR <80%, Owner Occupier, Principal & Interest
2.61% p.a. variable
2.67% p.a.
Competitve low interest rate for owner-occupiers with at least a 20% deposit, and no upfront fees. Free extra repayments and redraw. Zero ongoing fees.
^See information about the Mozo Experts Choice Home loans Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.
Views, news, tips and guides to help find the home loan for you.
Interest rates are set by the Reserve Bank of Australia (RBA). The RBA meets on the first Tuesday of every month to announce whether the official cash rate will stay the same, increase or decrease, based on things like inflation, employment, economic growth and how much people are spending. The idea is that higher rates will slow borrowing and therefore economic activity and inflation and lower rates will do the opposite.
Lenders will then set their own home loan interest rates based on the RBA’s decision.
The type of interest rate you pay on your home loan can affect how much you pay overall and each month. There are pros and cons to each type, so it’s important to take the time to find out which will suit you best. Your options include:
A fixed home loan interest rate locks in your repayment amount at a certain value and will remain the same for a set time, usually up to 5 years. This makes budgeting easier, as you’ll have a set amount that you need to pay each month that won’t be affected by rate increases.
The downside, however, is that if rates decrease while you’re on fixed term interest, you won’t reap any of the benefits. When your fixed term ends, you have the option to either enter into a new fixed rate or switch to variable rates.
In general, fixed interest rate loans are less flexible than other types of mortgage rates, and you could end up paying penalties if you repay the loan early.
A variable home loan interest rate means that your repayments might change at any time, based on changes to the cash rate or the whims of your bank. There’s less security in this type of interest rate - your repayments are subject to rises and falls in the market.
However, it’s a popular type of home loan in Australia, as variable rates often sit lower than fixed rates. A variable interest rate might suit you if you're looking for flexibility, as you’ll have the option to make extra repayments and pay off your loan quicker.
It can be hard to compare home loan rates sometimes. Aside from the interest rate, there might be extra fees and charges built into your home loan, which means the lowest headline interest rate might not always the best option. That’s where the comparison rate comes in.
The National Credit Code requires that lenders show comparison rates - which factor in interest, fees and charges - to give you a clearer idea of the true cost of a loan. So when you compare home loan interest rates on Mozo, you’ll see an interest rate plus a comparison rate for each product.
Keep in mind that comparison rates are a guide based on a secured loan of $150,000 over 25 years, with monthly principal and interest repayments. Different values or time frames on loans will mean different comparison rates. So while the comparison rates on our site are useful for choosing the best value home loan, to find out exactly how much interest you’ll be paying you'll need to check with your lender.
How much you pay each month will depend on numerous factors, including what type of rate you’re paying, how often your interest is calculated and how long your home loan term is for. One of the important factors in determining how your interest rates are calculated is whether your home loan is an interest only or principal and interest loan. Here’s the difference:
With an interest only loan your monthly repayment consists of only the interest for the loan, and not the loan amount itself. The monthly savings can be significant if you’re not paying any of the principal loan amount, which might be a great short term solution if you’re running on a tight budget. The downside is that you won’t be making any progress toward actually owning your home.
Interest only loans are popular for investors, because they’re often counting on the value of the home increasing enough to sell the property, pay off the loan and make a profit.
Remember that you will eventually have to pay off the total loan amount, so while an interest only loan might be affordable in the short term, you should have a long term repayment plan in place.
With a principal and interest loan, you’re paying interest, plus a part of the total loan amount each month. At the beginning of the loan, most of your repayment will go toward paying interest and a little will go toward the loan amount. As the principal amount gets lower, so does the interest you need to pay on it, so eventually, most of your monthly repayment will be going towards the principal, while a little goes to interest.
While you’ll be paying more each month than you would with an interest only loan, the good news is that by the end of your loan term, you’ll own your home entirely.
You can use Mozo’s home loan repayments calculator to see not only how much your monthly repayments would be with either an interest only or principal and interest home loan, but also how much total interest you would pay with each one.
Got more questions about home loans? We’ve got answers. Below, we run through some key bits of info to help you understand home loan interest rates, and put you on the right track to find a home loan that suits you.
The comparison rate is designed to give you an accurate picture of how much each home loan might cost you by taking into account fees and any other extra charges, so don’t forget to use it.
You have to weigh up the benefits and disadvantages to having extra features on your home loan. While some extras like an offset account, free extra repayments and repayment flexibility can save you money, others may not be so helpful and you generally pay a higher premium for a full features home loan. Take a careful look at the features being offered and decide if they are worth the extra cost. If you’re not sure exactly which feature might benefit you, check out Mozo’s guide to home loan features in a nutshell.
Your interest might be calculated daily, monthly, quarterly or annually. Daily interest is best because it’s calculated as your principal loan reduces, and so you’ll pay less interest all up. Annual interest, on the other hand, is calculated each day, but based on a yearly principal, which means it takes a whole year before you’ll pay less interest. If you’re on anything other than daily interest, try to time your monthly repayments to be before your interest is calculated, so you’ll be paying interest on the lowest principal possible.
Banks don’t necessarily advertise the fact, but it is possible to negotiate a cheaper home loan rate. Success rates will vary depending on the specifics of the loan, but it’s always worth approaching your lender to see if they’ll budge.
The main goal for your home loan should be to pay as little interest as possible while remaining realistic about what monthly repayments you can afford to make. Here are a few tips and tricks to help you reduce the amount of interest you pay on your home loan:
There are heaps of competitive home loan interest rates available and it’s worth the time to do some research and find a rate that suits your budget and lifestyle. To get you started, check out these great tools at Mozo:
You can also check out our handy interest rate guides for information on how interest rates work and help calculating what interest you'll pay on your home loan.
