The RBA is tipped to cut official interest rates at its policy meeting this month, and lenders are scrambling to get ahead of the curve. Fixed rates continue to drop, with many headline rates approaching the 2% mark and a handful already below it. The best value is still to be found on 1- and 2-year terms, but 3-year rates are not far behind.
At the time of writing, Reduce Home Loans leads on 1-year terms with rates as low as 1.90% p.a. (2.43% p.a. comparison rate*). Meanwhile, Illawarra Credit Union offers 1.99% p.a. (2.93% p.a. comparison rate*) on 2-year terms, and Bank First offers 1.99% p.a. (3.10% p.a. comparison rate*) on 3-year terms.
Variable rates are also edging downwards, but at a slower pace. The current rate leader for owner occupier loans is Well Home Loans, which offers a 2.17% p.a. variable rate (2.20% p.a. comparison rate*), while the best value investor loan is from loans.com.au, which offers 2.54% p.a. (2.56% p.a. comparison rate*).
Among the biggest moves from last month was ING’s decision to slash up to 50 bp off selected investor rates. Its variable Orange Advantage (package) is now available to investors from 2.74% p.a. (3.09% p.a. comparison rate). Qudos Bank also cut its entire fixed suite by 10 bp, leaving its 3-year fixed rate for owner occupiers at 2.19% p.a. (2.79% p.a. comparison rate).
To find out how interest rates are tracking in other banking products for November, 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.
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1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
1 Year Discounted Variable Rate, 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.
Hot DealNEW RATE CUT EFFECTIVE TODAY!
2.19% p.a. variable
2.19% p.a.
<60% LVR, Owner Occupier, Principal & Interest
2.19% p.a. variable
2.19% p.a.
Once again Athena has cut rates in line with RBA! 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.^
1.95% p.a.
fixed 3 years
2.36% p.a.
Owner Occupier, Principal & Interest
1.95% p.a.
fixed 3 years
2.36% p.a.
$0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.
2.54% p.a. variable
2.55% p.a.
LVR<80%, Owner Occupier, Principal & Interest
2.54% p.a. variable
2.55% 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.
2.48% 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.
2.59% 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. Refinance and get $2,000 cashback for home loans over $250k with LVR ≤80%. Limited time offer extended, T&Cs apply.
2.34% p.a. variableApply now to get this rate from 29 Nov
2.34% p.a.Apply now to get this rate from 29 Nov
Owner Occupier, Principal & Interest
2.34% p.a. variableApply now to get this rate from 29 Nov
2.34% p.a.Apply now to get this rate from 29 Nov
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.
2.09% 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^
2.19% p.a.
fixed 3 years
2.68% p.a.
Owner Occupier, Principal & Interest, LVR<80%
2.19% p.a.
fixed 3 years
2.68% p.a.
Competitive fixed rates ranging from 2.19% (2.68% comparison rate*) across 1 to 5 year terms. No application fee or annual fee. Free extra repayments (up to $10,000 per year).
2.29% p.a. variable
2.23% p.a.
70-80% LVR, Owner Occupier, Principal & Interest
2.29% p.a. variable
2.23% p.a.
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.^
1.89% p.a.
fixed 2 years
2.94% p.a.
Owner Occupier, Principal & Interest, <80% LVR
1.89% p.a.
fixed 2 years
2.94% p.a.
No monthly account keeping fees & No loan establishment fee. Get a $2,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan of $250k+. T&Cs & eligibility criteria apply.
2.24% p.a. variable
2.21% p.a.
60-70% LVR, Owner Occupier, Principal & Interest
2.24% p.a. variable
2.21% p.a.
Fast online application with no fees. Free extra repayments and redraw facility. Min 20% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
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%.
2.59% p.a. variable
2.60% p.a.
Owner Occupier, Principal & Interest
2.59% p.a. variable
2.60% p.a.
No ongoing fees. Free extra repayments and online redraw. Mozo Experts Choice Split Home Loan 2020 winner^
2.54% p.a. variable
2.54% p.a.
Owner Occupier, Principal & Interest
2.54% p.a. variable
2.54% p.a.
Qudos Bank No Frills Home Loan with $0 bank fees and unlimited repayments. Winner of the Split Home Loan award in 2020. ^
1.99% p.a.variable for 24 months and then 2.50% p.a. variable
2.93% p.a.
Owner Occupier, Principal & Interest
1.99% p.a.variable for 24 months and then 2.50% p.a. variable
2.93% p.a.
The Works Package 2 year intro special variable rate Home Loan, for new owner occupied P&I home loans $150k and over. It comes with a 100% offset account to make your home loan repayments
^See information about the Mozo Experts Choice Home loans Awards
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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.
