The Reserve Bank of Australia cut the official cash rate target in February 2025. Banks have responded by lowering rates on home loans and other products. This is good news for borrowers and bad news for savers.
Australia's Big Four banks are the Commonwealth Bank, NAB, Westpac and ANZ. Together these big institutions dominate the market for loans, savings accounts and other consumer finance products.
The lowest home loan rates on the market typically come from smaller online lenders or customer-owned institutions like credit unions.
But the Big Four banks are not that far behind, and sometimes have rates that are almost as competitive.
Here's a graph charting the lowest rates for different loan types each month.
And here's how big the difference is between the average interest rates on the market and the lowest rates available on Finder.
| Australian interest rates February 2025 | Data |
|---|---|
| Average variable mortgage interest rate | 7.09% |
| Lowest variable rate available on Finder* | 5.13% |
| Average fixed mortgage interest rate | 6.39% |
| Lowest fixed rate available on Finder* | 5.29% |
*The lowest rates are from Finder's database of loans with at least 80% LVR. The lowest variable rate for February is Bank Australia's clean energy home loan and so may not be available for all.
| Response | 75+ yrs | 65-74 yrs | 55-64 yrs | 45-54 yrs | 35-44 yrs | 25-34 yrs | 18-24 yrs |
|---|---|---|---|---|---|---|---|
| Yes | 55.81% | 56.52% | 62.57% | 57.49% | 66.54% | 64.56% | 67.14% |
| No | 44.19% | 43.48% | 37.43% | 42.51% | 33.46% | 35.44% | 32.86% |
Interest rates on savings accounts are still fairly competitive compared to a few years ago. But as the cash rate has decreased these rates have started dropping too.
For high interest savings accounts, the Big Four tend to be less competitive than the highest rates on the market. And the highest rates from other banks tend to be limited to borrowers under 35 years of age and require you to deposit a certain amount each month.
| Maximum Variable Rate p.a. | |
|---|---|
| The Mutual Bank Internet Saver Account | 4.50% p.a. |
| Rabobank High Interest Savings Account | 5.45% p.a. |
| ING Savings Maximiser | 5.40% p.a. |
| MOVE Bank Growth Saver | 5.25% p.a. |
| Great Southern Bank Youth eSaver Account (0-17 year olds only) | 5.25% p.a. |
Term deposits are a safe way to lock up some of your cash for a certain period of time and earn a relatively high rate.
As with savings accounts, these rates fall when the cash rate falls. In 2025 we are seeing term deposit rates begin to drop below 5%.
The term deposit rate you can get depends on:
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The interest rate on a financial product determines how much interest is charged or generated on an amount of money.
📌 For borrowers a higher interest rate means you're charged more for the money you borrow. A lower rate makes money cheaper to borrow.
📌 For savers, a higher interest rate means you can earn more interest on the money you've saved. A lower rate means you earn less interest.
Here are some simple examples:
This includes the interest charged, plus some of the loan principal.
Now if your rate increased to 6.50%, your monthly repayments would rise to $3,793.
Use one of Finder's calculators to work out how interest rates affect your loans and savings.
"Many bank interest rates are determined by the official cash rate target (and other factors). When it goes up, borrowers get charged more interest and savers earn more on their cash. When it falls, the opposite happens. The last couple of years have seen rates rise fast to combat rising inflation. But as inflation has slowed, rates are starting to fall again. That's good news for people with home loans."
The Reserve Bank of Australia is the nation's central bank. One of the RBA's main roles is to conduct monetary policy, which includes influencing interest rates.
The RBA sets the official cash rate target, or the cash rate, which is an interest rate target that affects the cost of banks borrowing money from each other at short notice. This rate in turn affects interest rates on variable rate home loans and savings accounts.
An increase to the cash rate means higher rates for Australian consumers. This means they can earn more through savings accounts and term deposits. But it means their home loan repayments get more expensive.
A cut to the cash rate makes borrowing cheaper. It can mean lower repayments for borrowers with home loans. But it means your savings account interest rate will be lower too.
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