Current home loan interest rates in Australia

Average Australian interest rates versus the market's lowest rates

*Lowest rates listed above are based on products from lenders with whom Finder has a commercial partnership.

Where does this data come from?

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:

• Are 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 the average borrower would actually need.

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

• Fixed interest rates
• Variable interest rates
• Big Four bank interest rates
• Investment loan interest rates

When were mortgage rates 17% in Australia?

For many years – in fact, for over 2 decades – home loan interest rates in the double digits was normal. Rates exceeded 10% for the first time in 1974 and they then remained above 10% for over 20 years.

In 1990, they reached their peak high of 17%. This was a period of high bankruptcies as many people struggled to keep up with sky-high mortgage repayments. By 1994, interest rates dropped from the peak of 17% in January 1990 to a low of 8.75% in June 1994.

Since the mid-90s, interest rates have generally hovered between 4% and 8%, with a couple of anomolies: right after the GFC, they reached 9.6% briefly in August 2008; and right after Covid, when they dropped below 2%. Take a detailed look at historical home loan interest rates.

How home loan interest rates have changed over time

The graph below shows the lowest rate on the market each month. It's a helpful way to see just how much you can save by comparing interest rates.

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

What determines Australian interest rates?

Interest rates affect how much it costs to borrow money (and how much you can earn on money in your savings account).

Various factors combine to determine how high or low interest rates are at any time.

The Reserve Bank of Australia

Australia's Reserve Bank determines certain interest rate settings, including the official cash rate target. This is a benchmark interest rate that effects the cost of borrowing money.

When the cash rate increases, lenders pass on their higher costs to borrowers. When the cash rate falls, lenders drop rates.

The RBA determines the cash rate based on multiple factors.

• The economy. If economic growth is slow, lower interest rates can boost the economy by encouraging borrowing and spending. If the economy is booming but policy makers are worried about inflation or debt bubbles, increasing rates can help cool things down.
• Inflation. When inflation is high (prices for goods are rising), the Reserve Bank may increase interest rates to decrease the supply of money and drive spending down. This helps curb inflation.
• The US Federal Reserve. Large economies like the US have big effects on smaller markets like Australia. If the US Federal Reserve (America's version of the RBA) moves interest rates up or down, Australia is likely to follow to some degree.

While the Reserve Bank sets the floor for certain interest rates, banks and lenders have a lot of flexibility to price interest rates themselves. Some lenders may drop rates to entice new customers. Others may feel that they can keep customers while lifting rates.

What's happening with Australian interest rates?

Home loan interest rates began rising rapidly in 2022 when the Reserve Bank of Australia lifted the cash rate 8 times in 8 months. Then there were 5 rate rises in 2023.

In 2024, there was talk of interest rates coming down again. By late 2024, most economists began predicting that interest rates would start to fall by the end of the year or early 2025.

You don't have to wait for the RBA to change rates to get a better deal, though. You can ask your lender to put you on a more competitive rate. And if that doesn't work, then compare home loans and look for a better deal.

How much difference does a higher or lower interest rate make?

Even a slight variation in interest rates can make thousands of dollars of difference over the life of a home loan. For example, let’s consider 2 otherwise identical home loans with principal-and interest-repayments and 30-year loan terms. The only difference is a 50 basis point difference in the rate.

As you can see, 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

• How much difference does a higher or lower interest rate make?

  When you borrow money to finance the purchase of a home, banks don't just hand the funds out for free. Not only will you have to pay back the money you borrow, but you'll also have to repay the interest that accumulates on that principal amount.

  When comparing home loans, checking out the current average home loan interest rate on this page gives you a quick and easy way to compare rates for different mortgages on the market at any given time.

• What is the average interest rate on a mortgage?

  Current mortgage interest rates depend on the type of mortgage and your personal circumstances. For example, a lower loan to value ratio (meaning you have a higher deposit or more equity in the home) usually qualifies you to receive a lower interest rate on your mortgage. The purpose of the loan impacts the price, too, as investment and interest-only loans are usually more expensive than residential owner occupier loans.

• What will mortgage rates be in 2025 in Australia?

  While no one knows for sure, most bank economists and industry experts are expecting the cash rate to fall around 100 basis points (or 1%) by the end of 2025. This would bring the cash rate down from 4.35% to 3.35% and your home loan should theoretically reduce by 1% as well.

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

Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise

Richard has written 554 Finder guides across topics including:

• Home loans
• Property
• Personal finance
• Money-saving tips