Get Some Professional Advice First
Your Guide to the Latest Interest Rate Update in Australia
As of November 2024, the Reserve Bank of Australia (RBA) has kept the cash rate target at 4.35%, a vital factor that influences home loan interest rates and can directly affect your mortgage costs.
Here at Q Financial, our team is dedicated to helping you understand how the latest interest rate update in Australia may affect your mortgage strategy. This page will walk you through the definition of cash rate, the role of the RBA in setting it, and its impact on home loan rates. You’ll also gain insights into typical mortgage rates, strategies for navigating the loan market, and an overview of lenders that offer home loans. With this resource, you can make informed financial choices with confidence.
Understanding the Cash Rate’s Role in Home Loan Interest Rates
The cash rate, set by the RBA, represents the interest banks charge each other for short-term “overnight loans.” This rate is a foundation for various interest rates across the economy, including those for savings accounts, home loans, personal loans, and term deposits. By adjusting the cash rate, the RBA manages inflation, employment, and economic stability. For example, if inflation is high, the RBA might raise the cash rate to temper spending, whereas if economic growth is a priority, they may lower it to boost borrowing.
Home loan rates tend to adjust according to the cash rate’s movement. When the cash rate decreases, lenders typically reduce their interest rates, making monthly repayments more affordable for both current homeowners and those buying their first home. Conversely, an increase in the cash rate usually results in higher mortgage rates, raising the cost of monthly payments. Shifts in the cash rate — no matter how subtle — can influence your loan expenses over time, so staying informed on these updates is vital for making sound mortgage decisions.
Current Mortgage Interest Rates
Although the RBA cash rate acts as a guide for lenders in setting home loan rates, actual mortgage rates differ based on factors such as the interest rate type (fixed or variable), the term length, and your loan-to-value ratio (LVR).
Variable Rates
Variable home loan rates often align closely with the cash rate, changing as the RBA adjusts its policies. At present, owner-occupier loans with principal and interest payments average around 6.67% for variable rates, though this number will vary depending on your lender and borrower profile. Variable rates are ideal if you seek flexibility, but remember that if the cash rate rises, your repayments may also increase.
Fixed Rates
Fixed-rate mortgages in Australia are influenced by the term you select, typically ranging from one to five years. Shorter terms often come with lower fixed rates, while longer terms provide the benefit of stable, predictable repayments, which can be beneficial if you prefer to avoid interest rate fluctuations.
Rate Differences Between Investors and Owner-Occupiers
Investor loans tend to carry higher rates compared to owner-occupier loans, as lenders view investment properties as higher risk. Regardless of the borrower type, both investors and owner-occupiers can explore fixed and variable options to find competitive rates that suit their financial goals.
Overview of Lenders Offering Home Loans in Australia
Below, we list various Australian lenders offering home loans. You can click on their links to see their latest interest rate update as of today.
The Big Four Banks
These major banks lead the home lending market in Australia, offering a comprehensive range of loan products and banking services.
- Australia and New Zealand Banking Group (ANZ): Offers various home loan options with flexible repayment choices and digital tools for easy management.
- Commonwealth Bank of Australia (CBA or CommBank): Australia’s largest bank, providing a wide selection of home loans, including personalised support and flexible rates.
- National Australia Bank (NAB): Offers loans with adaptable features, such as fixed and variable rate options, alongside digital tools for mortgage management.
- Westpac Banking Corporation: Provides a broad array of loan options, including features like split loans and offset accounts.
Other Major Banks
Although not part of the Big Four, these reputable banks are established across Australia, providing various financial products, including home loans.
- AMP Bank: Features competitive home loan rates with flexible options.
- Bank of Queensland (BOQ): Delivers personalised service and flexible home loan choices.
- BankSA: A Westpac subsidiary offering home loan products for South Australians.
- Bankwest: Part of Commonwealth Bank, offering various home loan products mainly in Western Australia.
- Bendigo and Adelaide Bank: Known for community-oriented banking and competitive home loan offerings.
- Hongkong and Shanghai Banking Corporation (HSBC): Globally recognised bank offering home loans at competitive rates.
- Internationale Nederlanden Groep (ING): Renowned for online banking and straightforward home loan applications.
- Macquarie Bank: Offers a range of mortgage solutions with flexible terms, including investment loans.
- St.George Bank: Another Westpac subsidiary offering diverse home loan features.
- Suncorp Bank: Primarily serving Queensland, providing a comprehensive range of home loan products.
- Virgin Money: Digital-focused bank delivering a variety of home loan options.
Mutual Banks or Customer-Owned Banks (Credit Unions)
Often reinvesting profits for their members’ benefit, these member-owned banks typically provide home loans at competitive rates and flexible terms.
- Australian Mutual Bank: Designs home loans around member needs.
- Auswide Bank: Offers a community-focused range of home loan products.
- Bank Australia: Renowned for ethical banking, offering home loans that consider environmental and social impacts.
- Beyond Bank: Provides members with a variety of home loan choices and a focus on community investment.
- Border Bank: Specialises in home loans for residents in border communities, as well as customs employees.
- Community First Bank: Provides flexible home loans with a member-first approach.
- Great Southern Bank: The largest customer-owned bank in Australia, with a wide range of home loan options.
- Heritage and People’s Choice: Recently merged, offering a comprehensive selection of home loan products.
- Hume Bank: Specialises in personal banking and home loan products for regional Australians.
- Newcastle Permanent: Serves Newcastle and nearby areas with various home loan options.
- Unity Bank: Prioritises competitive rates and member benefits in its range of home loans.
Specialised Customer-Owned Banks (For Specific Professions or Communities)
These customer-owned banks provide targeted services, especially home loans, for specific professions or community groups.
- Australian Military Bank: Caters to Australian Defence Force personnel with specialised financial products, including home loans.
- Defence Bank: Serves defence personnel with dedicated home loans and financial services.
- Firefighters Mutual Bank: Offers home loans and financial services catered to firefighters.
- P&N Bank: The largest locally owned bank in Western Australia, originally established for police and nurses, offering a range of home loans.
- Police Credit Union: Focuses on home loan products for law enforcement and emergency service personnel.
- Teachers Mutual Bank: Provides home loans and financial products for educators, university staff, and professionals in related sectors, including healthcare.
Digital Banks
These banks operate exclusively online, providing a full spectrum of banking services, including loans, with a digital-first approach.
- Up Bank: Popular for its user-friendly app, robust savings features, and home loan options for digital-first customers.
- ubank: Offers competitive home loans and savings accounts designed for digital users.
- Unloan: Digital mortgage lender backed by Commonwealth Bank, providing annual rate discounts.
Online Lenders
These lenders do not offer full banking services but instead specialise in lending products such as home and personal loans, streamlining applications through digital platforms.
- homeloans.com.au: Offers competitive rates and a straightforward online loan process.
- loans.com.au: Focuses on home and personal loans via a digital-first platform.
- Tiimely Home: Previously Tic:Toc, prioritising fast-tracked online mortgage applications.
- Yard: Provides flexible home loan solutions.
Fintech Companies
These companies leverage technology to deliver financial services across different areas, extending beyond home loans.
- Athena: Provides competitive home loans with a simple online application.
- Qantas Money: Offers financial products — including credit and loan options — linked to Qantas points.
- WLTH: Specialises in digital-first financial solutions covering lending, property, and lifestyle.
Non-Bank Lenders
Operating without a traditional banking licence, these lenders focus on specialised loan products.
- Easy Street – Offers a variety of home loans with competitive rates.
- Firstmac – Provides home and investment loan options at competitive rates.
- Homestar Finance – Delivers affordable home loan solutions featuring flexible terms.
- HomeStart – Provides affordable home loan products aimed specifically at first-time buyers.
- La Trobe Financial – Specialises in tailored lending solutions, including home loans designed for those with unique financial circumstances.
- Pepper Money – Recognised for its flexible lending options especially suited for borrowers with complex credit backgrounds.
- RedZed – Focuses on financing options for self-employed individuals and others with distinctive financial profiles.
- Well Money – Offers competitive home loans with the convenience of fast online approval.
Lenders’ Interest Rates
Housing and Business Rates (September 2024)
| Loan purpose | Outstanding loans% per annum | New loans% per annum |
| Housing (Table F6) | ||
| Owner-occupier | 6.08 | 6.26 |
| – Principal-and-interest | 6.04 | 6.19 |
| – Interest-only | 7.00 | 6.97 |
| Investment | 6.44 | 6.49 |
| – Principal-and-interest | 6.38 | 6.41 |
| – Interest-only | 6.61 | 6.61 |
| Business (Table F7) | ||
| Small business | 7.42 | 7.25 |
| Medium business | 6.28 | 6.21 |
| Large business | 5.81 | 5.57 |
| a) Includes loans at variable and fixed interest ratesSources: APRA; RBA | ||
Latest News
SBS News: ‘Balls in the Air’: The Big Four Bank That’s Pushed Back Its Predicted Interest Rate Cut
- NAB has shifted its forecast for the RBA’s next interest rate cut from February to May 2025, citing economic uncertainties.
- The bank notes that, while inflation is easing, factors like wage growth, global volatility, and fluctuating consumer spending may prompt the RBA to be cautious.
- Westpac, Commonwealth, and ANZ still anticipate a February rate cut, while other banks warn that a cut may not happen in 2025.
- The RBA kept the cash rate at 4.35% in November, the highest since 2011, with inflation at 3.5% in the September quarter.
- Canstar’s Sally Tindall highlights that a delayed rate cut could add nearly $2,000 in interest over two years for borrowers with a $600,000 mortgage.
- The RBA faces pressure to reduce rates, but Governor Michele Bullock emphasises a “careful calibration” approach, aiming for economic stability.
- The ACTU urges the RBA to cut rates before year-end, arguing that Australians have endured prolonged financial strain due to inflation control measures.
Yahoo Finance: NAB Slashes Interest Rates for Homeowners as RBA Pressure Heats Up
- NAB, Australia’s third-largest home loan lender, announces a reduction in variable interest rates, effective November 14.
- The rate cut, spurred by ongoing pressure on the RBA to lower rates, reduces NAB’s base variable rate by 0.40% for owner-occupiers and investors paying principal and interest, and by 0.60% for interest-only loans.
- These cuts apply only to new customers, leaving existing borrowers without immediate relief.
- Canstar’s Sally Tindall suggests existing customers should use this opportunity to request a rate reduction from NAB.
- NAB’s new rates are competitive but still not the lowest among the Big Four banks, with Commonwealth Bank and ANZ offering lower digital-only rates for qualified refinancers.
- Beyond the Big Four, 38 other lenders offer variable rates below 6%.
- In addition to variable rate reductions, NAB recently cut fixed rates for owner-occupier and investor loans, marking its second rate change within three months.
- All Big Four banks forecast the RBA will begin rate cuts in February 2025, with CBA and Westpac predicting a total cash rate drop to 3.35% by year-end 2025, NAB to 3.1% by early 2026, and ANZ to 3.6% by late 2025.
News.com.au: Proof It’s Never Been Tougher to Buy a Home in Australia
- New data highlights record-breaking housing unaffordability in Australia, with house prices rising 3435% since 1975, compared to only a 1183% increase in full-time wages.
- Sydney is the least affordable city, where the median house price requires 19 times the average annual wage, up from five times in 1975. Mortgage repayments in Sydney now consume 143% of the national median monthly wage.
- Melbourne, Brisbane, and Adelaide have also seen sharp increases, with house prices up by over 3000% over the past 50 years.
- Rising prices have priced out median income earners, with many in Melbourne relocating to regional areas for affordability.
- Despite wage growth in Western Australia through high-paying mining jobs, Perth’s house prices have risen from $24,500 in 1975 to $777,921 in 2024, with mortgage repayments now averaging 68% of the median wage.
- AMP’s Shane Oliver notes that immigration-driven demand is keeping prices high, with Australia needing to build 250,000 homes annually to meet demand but only reaching 176,000.
- REA Group’s Eleanor Creagh attributes ongoing price increases to tax cuts that have enhanced borrowing capacities, with strong demand driving continued growth despite affordability concerns.
FAQs on Home Loan Interest Rates
How does the RBA’s cash rate impact home loan interest rates?
The cash rate set by the Reserve Bank of Australia (RBA) serves as lenders’ benchmark in determining home loan interest rates. When the cash rate is high, mortgage interest rates tend to increase, which can make repayments more expensive. On the other hand, a low cash rate usually prompts lenders to reduce mortgage rates, making borrowing more affordable. However, additional factors, such as funding costs and competition, also play a role, meaning the cash rate isn’t the only factor affecting your home loan rate.
What is the current interest rate for home loans?
Home loan interest rates in Australia vary between lenders and are largely affected by the RBA’s cash rate, which stands at 4.35% as of November 2024. Currently, variable interest rates for owner-occupiers generally fall between 6% and 7%. Fixed rates vary depending on the term length, often slightly higher for longer terms. For the most accurate rate for your needs, check with your lender or explore rate comparisons online, as these sources provide up-to-date information on market fluctuations.
Should I select a fixed or variable interest rate?
Choosing between a fixed or variable interest rate will depend on your financial situation and goals. A fixed rate secures your interest for a specific term, ensuring steady monthly payments, which can be useful if you anticipate a rate rise. In contrast, a variable rate adjusts with the cash rate, potentially lowering costs when rates are down but raising payments if they increase. To balance both options, many borrowers prefer a split loan, where part of the loan has a fixed rate and the rest is variable. It’s advisable to consult a mortgage broker for personalised guidance and a strategy suited to your needs.
What is a good interest rate on a home loan?
A “good” interest rate on a home loan is influenced by the current market and the type of loan you’re interested in, whether fixed or variable. Generally, a competitive rate sits below the national average, which can fluctuate in line with the RBA’s cash rate. Currently, variable rates for owner-occupiers hover around 6-7%, though your actual rate could differ based on factors like your loan type, credit score, and deposit size. By comparing lender rates and checking if they align with your financial goals, you can determine the rate that best suits your needs.
What can I do to lower my home loan interest rate?
To reduce your interest rate, you might consider refinancing your home loan, particularly if current rates are more favourable than when you first obtained your loan. Increasing your deposit or improving your credit score may also help you qualify for a lower rate. Additionally, comparing rates from various lenders, considering features like offset accounts, or opting for a shorter loan term can all contribute to reducing the total interest paid on your loan over time.
