Could the Latest Interest Rate Update in Australia Shape Your Mortgage Strategy? Find Out Now.

With the Reserve Bank of Australia (RBA) holding the cash rate steady at 4.35% as of November 2024, the financial landscape remains uncertain for borrowers. This critical rate not only influences home loan interest rates but also directly affects how much you pay on your mortgage. Understanding the connection between the rate update and your repayments is key to making informed financial decisions.

At AxJ Finance Brokers, we simplify these complexities, providing you with the basics of the cash rate and how it impacts home loan rates. We’ll also offer insights into average mortgage rates, practical tips for navigating the loan market, and a list of Australian lenders offering competitive options – helping you make informed choices and take control of your mortgage strategy.

What Is the Cash Rate and Its Role in Home Loan Interest Rates?

The cash rate, determined by the RBA, influences a wide range of financial products, including home and personal loans, term deposits, and savings accounts. It represents the interest rate banks charge one another for short-term ‘overnight loans’ to manage daily cash flow needs. By altering the cash rate, the RBA aims to support key economic objectives such as maintaining stability, regulating inflation, and promoting employment. For instance, a higher cash rate can help curb inflation by reducing spending, while a lower rate encourages borrowing and stimulates economic activity.

Home loan rates typically mirror changes in the cash rate. When the cash rate drops, lenders often lower their interest rates, making mortgages more affordable for both first-time buyers and existing homeowners. On the contrary, an increase in the cash rate can lead to higher mortgage repayments. Even small adjustments to the cash rate can significantly impact your long-term loan costs, highlighting the importance of keeping yourself updated on these changes.

What Are the Current Home Loan Interest Rates in Australia?

While the RBA’s cash rate acts as a baseline, the actual interest rates for home loans depend on factors such as whether your loan is fixed or variable, what the term length is, and what your loan-to-value ratio (LVR) is.

Fixed Rates

The interest rates on fixed rate home loans vary depending on the term length, which typically lasts one to five years. While shorter terms often offer lower rates, longer terms provide the benefit of stability, shielding you from rate fluctuations. If consistent and predictable repayments are important to you, fixed rates may be a suitable choice.

Variable Rates

Variable interest rates are closely linked to movements in the cash rate. Currently, the average variable rate for owner-occupiers paying principal and interest is approximately 6.67%. However, these rates can vary between lenders and based on individual borrower profiles. Variable rate home loans can be advantageous as they offer flexibility, but don’t forget that your repayments could rise if the cash rate increases.

Investor vs Owner-Occupier Rates

Interest rates for investment loans are generally slightly higher than those for owner-occupier home loans, as lenders perceive investment properties to carry more risk. Nonetheless, both types of borrowers can explore fixed and variable rate options to secure the most competitive deal.

Which Australian Lenders Offer Home Loans?

In Australia, a variety of lenders – including traditional banks, customer-owned banks, and non-bank financial institutions – offer home loan products tailored to different needs and preferences. Below, you’ll find a list of lenders, an overview of their services, and links to their interest rate update as of today. With this information, you can stay ahead in the ever-changing mortgage market and choose a loan that best suits your financial needs.

Australia’s Big Four Banks

The Big Four banks dominate the Australian home loan market, offering a wide range of mortgage products and additional banking services to suit diverse needs.

Australia and New Zealand Banking Group (ANZ): Flexible mortgage solutions with innovative digital tools for efficient home loan management.
Commonwealth Bank of Australia (CBA or CommBank): Wide range of loans offering personalised support, competitive rates, and adjustable features.
National Australia Bank (NAB): Fixed and variable rate loans supported by digital tools for seamless mortgage management.
Westpac Banking Corporation: Comprehensive loan options, including offset accounts and split loan features for flexibility.

Notable Banks Beyond the Big Four

These institutions, though not part of the Big Four, are well-established in Australia and offer competitive home loan products.

AMP Bank: Flexible home loan options with competitive rates.
Bank of Queensland (BOQ): Personalised mortgage solutions with adaptable features.
BankSA (Westpac subsidiary): Specialised home loans with features tailored to South Australian residents.
Bankwest: Customised home loan products for Western Australian borrowers.
Bendigo and Adelaide Bank: Community-focused loans offering competitive rates and tailored solutions.
Hongkong and Shanghai Banking Corporation (HSBC): Home loans featuring competitive rates and flexible repayment options.
Internationale Nederlanden Groep (ING): Loans with competitive loan terms and simple, digital-friendly application processes.
Macquarie Bank: Diverse mortgage products, including investment loans with flexible terms.
St.George Bank: Customisable mortgage products under the Westpac Group.
Suncorp Bank: Broad home loan options catering primarily to Queensland residents.
Virgin Money: Modern, digital-first mortgages for tech-savvy borrowers.

Customer-Owned Banks (Credit Unions and Mutual Banks)

These member-focused institutions offer competitive rates and community-centred mortgage products.

Australian Mutual Bank: Customised loans aligned with members’ unique needs.
Auswide Bank: Community-centred mortgages offering flexibility and variety.
Bank Australia: Ethical loans prioritising environmental and social impact.
Beyond Bank: Flexible mortgage solutions supporting community reinvestment projects.
Border Bank: Specialised loans designed for border residents and customs employees.
Community First Bank: Member-focused mortgage options with adaptable terms.
Great Southern Bank: Comprehensive loans with flexible features for members.
Heritage and People’s Choice: Diverse loan options at competitive rates.
Hume Bank: Regional-focused home loans tailored to local needs.
Newcastle Permanent: Comprehensive and competitive home loans for Newcastle area residents.
Unity Bank: Loans with competitive rates tailored for members’ financial goals.

Specialised Customer-Owned Banks

These institutions offer home loans tailored to specific professions or communities’ needs.

Australian Military Bank: Home loans designed for the unique financial needs of Defence Force members.
Defence Bank: Home loans with flexible features catering to military personnel.
Firefighters Mutual Bank: Specialised mortgage options exclusively for firefighters.
P&N Bank: Competitive loans for Western Australians, especially police and nurses.
Police Credit Union: Customised mortgage solutions for law enforcement and emergency responders.
Teachers Mutual Bank: Financial solutions for education professionals and those working in related fields.

Digital Banks

Operating entirely online, these banks provide mortgages with a focus on efficiency and convenience.

Up Bank: Home loans available via an intuitive app for tech-savvy borrowers.
ubank: Affordable digital-first loans with simple, user-focused features.
Unloan (Supported by Commonwealth Bank): Online mortgages with annual rate discounts for long-term affordability.

Online-Only Lenders

These lenders specialise in fully online platforms, simplifying the home loan process for borrowers.

homeloans.com.au: Competitive rates with a streamlined online process.
loans.com.au: Convenient home and personal loan solutions with user-friendly digital tools.
Tiimely Home (Formerly Tic:Toc): Simple online loan applications with quick approvals.
Yard: Flexible loans prioritising digital convenience.

Fintech Companies

These lenders leverage technology to provide competitive and convenient home loan options.

Athena: Transparent loans with competitive rates and no hidden fees.
Qantas Money: Loans linked to Qantas rewards programs.
WLTH: Digital-first solutions for mortgages and property finance.

Non-Bank Lenders

Operating outside the traditional banking system, these lenders provide unique products for borrowers with specialised needs.

Easy Street: Affordable and flexible loan products.
Firstmac: Competitive home and investment loans with customisable features.
Homestar Finance: Low-cost mortgages offering flexibility and affordability.
HomeStart: Accessible home loans aimed at supporting first-time buyers.
La Trobe Financial: Customised mortgage solutions for borrowers with unique circumstances.
Pepper Money: Flexible loans catering to borrowers with complex credit profiles.
RedZed: Flexible mortgage products designed specifically for self-employed individuals.
Well Money: Loans with competitive rates and fast approvals.

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 adjusted its forecast for the Reserve Bank of Australia’s (RBA) next interest rate reduction, shifting its expectation from February to May 2025 due to ongoing economic uncertainties.
The bank highlights that despite easing inflation, factors such as increasing wages, fluctuating global markets, and inconsistent consumer spending may prompt the RBA to adopt a cautious approach.
Westpac, Commonwealth Bank, and ANZ maintain their prediction of a February rate cut, while other financial analysts warn that rate reductions might not happen at all in 2025.
In November, the RBA kept the cash rate at 4.35%, its highest level since 2011, as inflation stood at 3.5% for the September quarter.
According to Canstar’s Sally Tindall, if interest rate cuts are postponed, a borrower with a $600,000 mortgage could incur nearly $2,000 in additional interest payments over two years.
Although there is significant pressure on the RBA to lower interest rates, Governor Michele Bullock emphasises the importance of a ‘careful calibration’ strategy to preserve economic balance.
The Australian Council of Trade Unions (ACTU) is advocating for rate cuts before year-end, arguing that prolonged inflation control measures have caused financial strain for Australians.

Yahoo Finance: NAB Slashes Interest Rates for Homeowners as RBA Pressure Heats Up

NAB, Australia’s third-largest home loan provider, has announced a reduction in its variable interest rates, effective Thursday, November 14.
The rate decrease, influenced by ongoing pressure on the Reserve Bank of Australia (RBA) to lower rates, includes a 0.40% cut for owner-occupiers and investors paying principal and interest and a 0.60% reduction for interest-only loans.
These reductions apply exclusively to new borrowers, leaving existing NAB customers without immediate rate relief.
Canstar’s Sally Tindall suggests that current NAB customers should use this rate adjustment as an opportunity to negotiate for a better rate.
While NAB’s updated rates are competitive, they are not the lowest among the Big Four banks, with Commonwealth Bank and ANZ offering lower digital-only rates for eligible refinancers.
Beyond the Big Four, 38 other lenders are providing variable interest rates below 6%.
In addition to the variable rate cuts, NAB has recently reduced fixed rates for both owner-occupiers and investors, marking its second rate adjustment in three months.
All Big Four banks predict the RBA will begin cutting rates in February 2025, with Commonwealth Bank and Westpac forecasting a cash rate of 3.35% by the end of 2025, NAB expecting 3.1% by early 2026, and ANZ projecting 3.6% by late 2025.

News.com.au: Proof It’s Never Been Tougher to Buy a Home in Australia

New data shows that housing in Australia has reached unprecedented levels of unaffordability, with house prices surging by an astounding 3435% since 1975, compared to an 1183% increase in full-time wages.
Sydney has emerged as the least affordable city in Australia, with the median house price now 19 times the average annual income, up significantly from five times in 1975. Mortgage payments in the city currently consume 143% of the national median monthly salary.
Cities such as Melbourne, Brisbane, and Adelaide have also seen dramatic growth in house prices, each experiencing increases exceeding 3000% over the last 50 years.
In Melbourne, many individuals earning a median income have been priced out of the city, prompting a shift towards regional areas where housing is more affordable.
In Western Australia, although mining jobs have boosted wages, Perth’s house prices have risen from $24,500 in 1975 to $777,921 in 2024, with mortgage repayments now accounting for 68% of the median income.
According to AMP’s Shane Oliver, the high demand for housing, driven by immigration, has kept prices elevated. While Australia needs to build 250,000 homes annually to meet demand, only 176,000 are being constructed each year.
Eleanor Creagh from REA Group attributes the sustained rise in housing prices to tax cuts that have expanded borrowing capacity, enabling demand to persist despite significant affordability concerns.

FAQs on Home Loan Interest Rates

How does the RBA cash rate influence home loan interest rates?

The Reserve Bank of Australia’s (RBA) cash rate serves as lenders’ guide when setting home loan interest rates. An increase in the cash rate typically leads to higher mortgage rates, making repayments more expensive. Conversely, a drop in the cash rate often results in lenders lowering their rates, making borrowing more affordable. However, additional factors such as market competition and funding costs can also affect home loan rates, meaning the cash rate is just one piece of the puzzle.

Should I opt for a fixed or variable interest rate?

Choosing between a fixed or variable interest rate depends on your financial circumstances and goals. Fixed rates offer stability by locking in your repayment amount for a set period, which is ideal if rates are likely to rise. Variable rates fluctuate with changes in the cash rate, which can lower repayments when rates decrease but increase them when rates go up. A combination of both, known as a split loan, can provide a balance of stability and flexibility. Speaking with a mortgage broker can help you make an informed decision tailored to your situation.

What is a good interest rate on a home loan?

A good home loan interest rate is typically below the national average, which fluctuates based on the RBA’s cash rate and market trends. Currently, variable rates for owner-occupiers range between 6% and 7%. Your specific rate will be based on factors like your loan structure, deposit amount, and credit score. Comparing offers from different lenders is a smart way to find a rate that aligns with your financial needs.

What are the current home loan interest rates in Australia?

Home loan rates vary by lender and depend on the RBA’s cash rate, which is 4.35% as of November 2024. Variable rates for owner-occupiers generally fall between 6% and 7%, while fixed rates depend on the term length, with longer terms often having slightly higher rates. Checking with lenders or using rate comparison platforms can give you information on available offers and each lender’s most recent interest rate update in Australia.

How can I reduce the interest rate on my home loan?

Refinancing your loan is a common strategy to secure a lower interest rate, especially if present rates are better than when you first locked in your loan. Enhancing your credit score, increasing your deposit, or choosing a shorter loan term can also help reduce your rate. Exploring options such as offset accounts or negotiating with your lender can further lower the total interest you pay over the loan’s life.