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Variable Home Loan Rates Comparison
A variable rate home loan may provide flexible options for paying your mortgage. Search and compare variable home loan rates from over a hundred providers to find the mortgage that best suits your needs.
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Find and compare variable rate home loans
What is a variable rate home loan?
A variable rate home loan is one where the interest rate is subject to change over the life of the loan. When your variable home loan's interest rate rises or falls, so will your mortgage repayments.
Unlike a fixed interest rate that is set for a period of time, a variable interest rate can fluctuate based on a range of economic factors, including changes to the official cash rate set by the Reserve Bank of Australia (RBA). This means it is crucial to stay informed to how home loan interest rates may be moving when exploring variable rate home loan options.
Should I take out a variable rate home loan?
Whether a variable rate home loan is the right choice for you will depend on your individual financial situation and the kind of home buyer you are.
If you are a first home buyer
Variable rate home loans may offer more flexibility, but the added security offered by fixed rate home loans may appeal to some borrowers buying property for the first time. A set interest rate can provide a level of financial certainty and could help simplify your budget, allowing you to focus on building up equity in your home.
If you are an investor
If interest rates are tipped to fall, repayments on a variable rate investment loan could become more affordable. If you plan to sell the property or refinance soon, a variable rate loan might be more attractive if interest rates are lower than current fixed rate options. Plus, access to flexible features on your investment loan may help to further minimise interest repayments.
If you are refinancing
You'll want to take stock of the current rate environment if you're considering refinancing. This may help you better determine whether a fixed or variable rate will suit your budget for the foreseeable future. But if you originally signed up to a no-frills, basic mortgage, you could also consider switching to a variable rate home loan that also offers helpful features, like an offset account.
Benefits
- More flexibility in repayment terms and features
- Ability to refinance to a different home loan product and/or lender
- Potential to save on interest charges if interest rates drop
Drawbacks
- Increased repayments if interest rates rise
- Less predictability in terms of budgeting for repayments
How to find the lowest variable home loan rate
Finding the lowest variable mortgage interest rates can be relatively simple. Using a comparison table, you can compare apples with apples, filtering your results to view side by side and see how they shape up against each other.
- Start your search by entering some basic details about the kind of mortgage you’re seeking.
- You can use additional filters to further narrow down your list of potential home loan options.
- The more information you can provide, the closer the loans may match your requirements.
But just because a home loan comes with a low interest rate, that does not mean it is always cheapest overall. If you're aiming to keep your mortgage costs low, be sure to compare the fees the lender charges, including upfront, ongoing and exit fees. A low-rate home loan with high annual fees may cost more over a 30-year loan term than a mortgage with a higher rate but zero ongoing fees.
Conducting a thorough home loan comparison enables you to identify the best home loan rates for your specific needs and goals, ensuring you make a well-informed decision. A mortgage repayment calculator can help you find the approximate cost of mortgage repayments and understand how different interest rates, loan terms and more can affect your home loan's overall cost.
Low home loan rates for October
Some of the lowest comparison rates on RateCity at the time of writing include:
Source: RateCity.com.au. Data accurate as of 03/10/2024.
This is the comparison rate published by the lender and is on a per annum basis. The comparison rate is calculated for a secured loan for an amount of $150,000 over a 25 year term. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
What features are offered with a variable rate home loan?
Variable rate home loans may offer borrowers more features than some fixed rate home loans. While the available features will often differ from one lender to the next, they may include:
Offset account
An offset account is a transaction account that is linked to your mortgage. It works just like a standard bank account, but gives borrowers the opportunity to reduce their payable interest. The funds you deposit into your offset account help to 'offset' or reduce the interest owing on your mortgage. For example, if you have $550,000 owing on your mortgage, and $50,000 in your offset account, you would only be charged interest as if you had a loan balance of $500,000.
Extra repayments
Some lenders may allow you to make additional mortgage repayments on top of your monthly repayments without charge. Making extra repayments onto your mortgage could get you ahead of schedule and come closer to making an early exit from the home loan, reducing the total interest repayments you’d make, and shaving years off your loan term.
Redraw facility
A redraw facility allows you to withdraw any extra home loan repayments you’ve made in the past, subject to the lender's criteria. This way you can pay down your loan faster and reduce your interest charges, and know that you can access those extra funds if you need to. The amount you may withdraw can be capped by some lenders (typically around 80%), so be sure to read the terms and conditions first.
Split interest rates
A split rate home loan allows you to divide your mortgage between two rate types: fixed and variable. Borrowers can enjoy the stability of a fixed interest rate on one portion of the loan, while also taking advantage of the flexibility of a variable interest rate on the other portion. It doesn't have to be a 50/50 split either; you can divide your repayments 70/30 fixed and variable for example, or any other split you prefer.
What is cheaper: a fixed or variable rate?
It's hard to say whether a fixed or variable home loan rate will be cheaper for your specific mortgage. The key difference between the two is that fixed rate home loans have a set interest rate for a period of time - usually between one and five years.
Mortgage lenders typically adjust their home loan interest rates in accordance with the RBA’s cash rate. If a lender expects the cash rate to rise, you’ll generally find that fixed rates are higher than variable, and vice versa for fixed rates with a falling cash rate. It may be worth doing a little research on the current cash rate and where experts are suggesting it may move to (if at all).
Keep in mind that variable rate home loans may also offer more financial flexibility than fixed rate loans, with features like an offset account or redraw facility. While these perks may come with a higher interest rate, for some homeowners access to these features is more valuable than nabbing the lowest rate on the market for a no-frills basic home loan.
Check out our RBA cash rate page for more information on interest rate movements.
Calculator your repayments with a variable rate mortgage
Would a split interest rate be better in the long term?
If you're finding it hard to decide between a fixed rate home loan and a variable rate home loan, you could consider a split rate home loan and divide your mortgage between a fixed rate and a variable rate.
It is generally up to you to decide what percentage of your home loan will have a fixed rate and a variable rate. You may decide on a clean 50/50 split, or you might decide on a 25/75 split with a smaller portion on a fixed interest rate and the remaining balance on a variable rate.
On a split loan, you may be able to benefit from access to flexible features, such as an offset account or a redraw facility, and the ability to make additional repayments on the variable rate portion, while also benefiting from more consistent repayments from the portion with the fixed interest rate. Just keep in mind that if variable rates significantly decrease, the fixed portion of your loan won't benefit from those reductions, potentially leading to missed savings.
What to consider about variable rate home loans
When comparing your home loan options, it's important to look at more than just the interest rate that's on offer. Here are some important factors to consider:
Introductory rates
Lenders may offer introductory variable home loan rate discounts, or honeymoon rates, as special offers to entice new borrowers onto their books. The introductory period may even include perks like fee waivers, cashback offers and more.
After a set period of time, these introductory rates will then revert to a generally higher standard variable rate. If you choose a home loan offering a low introductory rate, ensure you know not only the exact period of time of this honeymoon period, but also what the lender's standard variable rate is. This way you can consider refinancing to a new, low rate loan once this period has ended if you find the ongoing rate is too high.
Features
Variable rate home loans are more likely to come with helpful features, such as an offset account or a redraw facility. However, some lenders may charge higher rates or fees for access to these features. Carefully consider the ongoing costs of a variable rate home loan with features before you apply, as you may find that starting with a no-frills basic variable rate option is more affordable to begin with - especially for first home buyers.
You can always refinance after a few years to a home loan with features once you've built up some equity and grown your own savings and income in this time.
The size of your deposit
You’re often more likely to enjoy lower variable interest rates on your mortgage if you can afford a larger deposit on your property. This added security helps to reduce the lender’s risk. The deposit size required for a mortgage varies by lender, but 20% is often considered an ideal deposit size for nabbing a more competitive loan option.
If you can’t afford a full deposit on the property you want, there may still be home loan options available to you. Some lenders offer mortgages with a high loan to value ratio (LVR), where you pay a smaller deposit and borrow a greater percentage of the property’s value. However, your lender may require you to pay Lender’s Mortgage Insurance (LMI) to keep them protected in case you default on your loan.
Alternatively, you may be able to have a parent or other close relative serve as your guarantor, using the equity in their property to guarantee your home loan in lieu of a deposit. This option can allow you to sidestep LMI, though it may also put the guarantor’s finances at risk if you were to default.
Keep in mind that, depending on your state or territory and whether you're a first home buyer or not, you may have to pay stamp duty on your property. This can range in the tens of thousands of dollars, so factor this potential cost into your deposit budget.
How does the market look?
Variable home loan rates are subject to market fluctuation, which can affect your repayments. In fact, this reason is why you may have heard friends or family describe variable rate home loans as dangerous or risky. It's important to understand how these fluctuations might affect your budget and cash flow, and whether you could comfortably afford any potential increases in your repayments.
Before you apply for a variable rate loan, take stock of the market and what economists and experts are suggesting could happen to the cash rate. Hop on the finance news sites, or our news page, to keep up with market trends. RateCity’s summary of the latest big bank interest rate predictions could come in handy here.
Variable rates from the big four banks
One of the first places to check out variable rate offerings is with Australia's biggest banks. They won't always offer the most competitive variable rates on our database, but if you're keen to see what ANZ, CBA, NAB, and Westpac offer, you can start here.
Lowest ANZ home loan rate
Interest Rate
6.54%
p.a.
Variable
Comparison Rate*
6.54%
p.a.
Principal and Interest
Lowest NAB home loan rate
Interest Rate
6.79%
p.a.
Variable
Comparison Rate*
6.87%
p.a.
Principal and Interest
Lowest CBA home loan rate
Interest Rate
6.15%
p.a.
Variable
Comparison Rate*
6.28%
p.a.
Principal and Interest
Lowest Westpac home loan rate
Interest Rate
6.84%
p.a.
Variable
Comparison Rate*
6.76%
p.a.
Principal and Interest
Finding your best variable rate home loan
At RateCity, there are several options available to help you find the ideal variable rate home loan to suit your financial situation when buying your new home. You can look at the current RBA cash rate and compare it to the other interest rates, and you can also use our calculators to estimate how much you could borrow, or the affordability of different loans.
You can also use comparison tables to compare the interest rates, fees and repayments for a wide variety of variable rate home loans that may suit your needs and goals. By viewing loan options side-by-side, you're able to easily compare your options. And if you were to sort your shortlist of loan options by Real Time Ratings™, you could end up with a range of home loan options based on your loan preferences, and sorted by the highest-rated products.
Alternatively, if you're looking for more help finding a variable rate loan that best suits your financial situation, it may be worth reaching out to a mortgage broker for personalised help.
How to find lower variable home loan rates
- Start with a comparison table: Comparison tables are an ideal place to search for a low variable home loan rate. This tool shows a list of available loans and lenders, and allows you to fill in a few blanks to better tailor the home loan search experience for your needs.
- Enter your loan amount: While a comparison table will start with a default loan amount, you can change the loan size to match your actual requirements, which will change the estimated repayments accordingly.
- Pick your deposit amount: Enter your deposit amount, such as 10%, 15% or 20%. Lenders often prefer a minimum 10-20% deposit, though some may be willing to loan to customers with deposits as low as 5%. The bigger your deposit, the more loans and lenders may be available to you.
- Decide on your loan term: Home loan terms are typically 20 to 30 years. The longer your term, the less your monthly repayments will cost, but the more you'll pay in total interest charges over time, and vice versa for shorter terms.
- Change the sorting order: Once you've tailored the list to match your needs, it's time to sort your options. If you're trying to find the lowest variable home loan rate, consider sorting home loans by their Interest Rate or Comparison Rate. Keep in mind that the lowest rate may not end up being the best loan, as other features could help improve a loan's value beyond the interest rate alone.
Fact Checked
The information on this page was fact checked by Tony Harris, a broker in New South Wales specialising in home loans, go-between loans, and commercial property loans. For more information on how brokers like this can assist you, look for a broker near you.
Frequently asked questions about variable home loans
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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.
