Best Home Loan Rates in Australia: How to Compare and Choose

Why “best home loan rate” means different things to different borrowers

It’s tempting to assume the best home loan in Australia is simply the one with the lowest interest rate. A low rate is important because it directly affects your borrowing costs: the lower the rate, the less interest you pay each month. But the “best” loan is not the same for every borrower. What works for a first home buyer may not suit a seasoned investor, and a borrower who values repayment certainty may make a different choice to someone who prioritises flexibility.

In practice, the best home loan is unique to your circumstances. It’s about finding a loan that fits your life, goals and budget—one that saves you money overall and gives you tools to manage the mortgage on your terms.

How home loans can be compared: rates, fees and features

When comparing home loan rates, it helps to break the decision into three core areas: interest rate, fees, and features. This approach keeps the comparison practical, because a loan with a sharp rate can still be expensive if it comes with high ongoing charges, and a slightly higher rate can sometimes be worthwhile if the features help you reduce interest or manage cash flow.

1) Interest rate: the biggest driver of monthly repayments

The interest rate is the primary factor that determines your borrowing costs. Even small differences can add up to meaningful changes in repayments over time.

For example, on a $600,000 home loan over 30 years, a 5.00% interest rate would cost $3,221 per month, while a 5.50% interest rate would cost $3,407 per month. That’s $2,232 more expensive over a year.

Rates vary based on loan type and features. They can also vary depending on whether the loan is principal and interest (P&I) or interest-only (IO), whether the property is owner-occupied or an investment, and what your loan-to-value ratio (LVR) is. A “good” interest rate is only good if it delivers the home loan you actually need.

As a general guide for January 2026:

• The average variable owner occupier interest rate is 6.41%, and the lowest variable owner occupier interest rate is 4.99%.
• The average fixed owner occupier interest rate is 5.83%, and the lowest fixed owner occupier interest rate is 4.94%.

In the current market, 4.75% is described as a very good rate. Occasional special offers may appear, but it can be hard to find a variable rate this low. Some fixed rates can be around this level too, though this can become less likely as expectations shift.

2) Fees: the costs that can quietly erode a low rate

While a low rate is important, it’s also essential to add up the cost of fees. Ongoing annual fees can cost hundreds of dollars, and one-off application or settlement fees can add hundreds more. When comparing loans, look at both the interest rate and the total fee structure so you can judge overall value.

Some loans may charge a high application fee but have no ongoing fees. Others may have low upfront costs but include annual package fees or service fees that you pay every year for the life of the loan.

3) Features: flexibility that can be worth paying for

Home loans with added features can offer more flexibility in how you repay and manage your mortgage. Features can matter because they can change how quickly you reduce interest costs, how you handle savings, and how you respond to changing circumstances.

Offset accounts are a key example. According to a survey, 43% of Australians think an offset account is one of the most important features when considering a home loan. An offset account can be especially valuable if you keep savings in cash and want those funds to reduce the interest charged on your home loan balance.

In simple terms, any money in your offset account is taken off your remaining loan value when interest is calculated, reducing the amount of interest you’ll pay. The more you save in the offset, the more you can save on interest over the life of the loan.

Other features can include extra repayments and redraw. While these are not necessarily unique, they can be important depending on how you manage your budget and whether you want the ability to access extra repayments later.

Understanding “like-for-like” comparisons and scoring approaches

One way to compare home loans is to group similar products together and compare them on a like-for-like basis. This can include separating loans by borrower type (such as owner occupier or investor), rate type (variable or fixed), and repayment type (such as P&I or IO). Fixed loans can also be split into short-term and long-term fixed rates.

Comparisons can factor in interest rate, fees and features to generate a simplified score. This kind of approach can help borrowers quickly see how a loan stacks up against other loans in the same category, rather than comparing products that aren’t truly comparable.

Examples of loan characteristics highlighted in current comparisons

Different loans can stand out for different reasons. Some are recognised for consistently low rates and minimal fees, while others are valued for offset structures or discounts tied to deposit size or home equity.

• One loan is described as offering a perk where the interest rate reduces by 0.01% for every year you hold the loan, while also having no fees. This may appeal to borrowers who want a low-cost structure and are not focused on having an offset account.

• Another option notes that adding an offset account increases the interest rate by 0.10%, but the resulting rate is still lower than many products that offer offsets. It also highlights no upfront or service fees, which can keep overall costs down.

• For investors, a similar year-by-year 0.01% rate reduction is also mentioned, along with no fees and unlimited redraw.

• One loan is described as offering a 2.20% discount for borrowers with a deposit or home equity worth more than 20% of the property price, paired with a $595 application fee but no ongoing fees.

• Another loan is noted for offering a 100% offset account and allowing borrowers to open up to 10 accounts, which can help with budgeting across different savings goals. It also includes free redraw.

These examples illustrate why it’s important to look beyond a headline rate. The best fit depends on whether you value offsets, redraw, fee simplicity, or discounts linked to equity.

Variable vs fixed: choosing based on your needs, not just the market

Borrowers often compare variable and fixed interest rates when choosing a home loan or refinancing. While market conditions can influence this decision, the best option can also depend on personal circumstances.

For instance, a fixed rate can provide confidence that repayments won’t change during the fixed period. This may be valuable for borrowers who want repayment certainty while navigating life changes and budgeting pressures. In contrast, many borrowers choose variable rates for flexibility, but that doesn’t automatically make variable the best choice for everyone.

Home loan strategies for different borrower situations

Because the best home loan depends on your situation, it can help to consider how priorities change across common borrower types.

First home buyers: deposit size, LVR, and scheme participation

Many first home buyers find saving for a deposit to be the biggest hurdle. In this scenario, the best home loan may not be the one with the lowest interest rate. Instead, it may be a loan that allows a higher LVR, enabling you to buy with a lower deposit—sometimes as low as 5%. These loans typically come with slightly higher interest rates.

First home buyers may also want to use government first home buyer schemes. Not all lenders participate in these schemes, so the best loan in this context may be one offered by a participating lender.

There is also a general rule mentioned for getting started: saving at least 10% of the property value can provide a 5% buffer (for a maximum 95% LVR loan) to cover costs such as stamp duty and lenders mortgage insurance (LMI) onto the principal of the loan.

It’s also important to ensure there is a high likelihood you’ll qualify before applying. Each credit application can be recorded, and multiple applications in a short period may increase the likelihood of rejection. Lenders may consider factors such as income, assets, liabilities, employment and credit history.

Borrowers with savings: when an offset account may matter more than the lowest rate

If you have money sitting in a savings account and you don’t want to invest it, a loan with a 100% offset account might be a strong fit. While a loan with an offset may sometimes come with a slightly higher interest rate, the offset feature could save you more than choosing a lower rate without an offset—depending on how much you keep in the account and how consistently you maintain that balance.

Some borrowers even use their offset as their primary savings account, because offsetting the home loan interest can be more effective than earning deposit interest, especially when the home loan rate is higher than a savings account rate and the debt is large.

Investors: structure and advice can be important

Property investors may have different needs, particularly if they still have their own home loan while also investing. In complex scenarios, getting personal advice from a mortgage broker and an accountant is described as a good idea.

Rental income can also affect borrowing power calculations. If a property has tenants and regular income, a lender will probably take it into consideration when assessing borrowing power, but it’s worth checking directly. Some lenders may only take 80% of rental income as part of borrowing power.

When speed matters: approval timelines as a deciding factor

Sometimes the “best” home loan is the one you can get approved quickly—particularly if settlement day is approaching and you don’t yet have approval. In that situation, borrowers may decide to talk to their existing bank rather than continue searching, or they may consider an online lender with a faster approval process.

Package home loans: convenience versus annual fees

Package home loans can bundle a home loan with other products such as a bank account and a credit card, sometimes with additional products. They can be a good option if you actually want those other products, because package structures may remove normal fees for the included products and can offer competitive loan pricing.

However, package loans typically charge an annual package fee, which can cost a few hundred dollars each year and is paid every year of the loan. To decide whether a package loan is right for you, factor in the package fee and consider whether you truly need the bundled products. For some borrowers, it may be convenient to keep banking and lending in one place; for others, a low-rate loan without the package structure may be better value.

Negotiating: asking for a discount

It can be worth asking your lender for a discount. The worst outcome is that the lender says no. While some mortgage brokers claim they can obtain discounts for clients, you can also ask your lender directly. Being in a good financial position can help when requesting a lower rate.

Awards and categories: examples of recognised home loan types

Awards programs can highlight loans that performed strongly over a 12-month period within specific categories. Examples of categories mentioned include investor variable loans (both P&I and IO), owner occupier variable and fixed loans, refinance loans, variable loans with offset, and lender categories such as large bank and customer-owned lender. These category-based results reinforce the broader point: there isn’t one best home loan for every borrower, and there isn’t one bank that consistently has the best home loan in Australia.

Online lenders vs large banks: why it’s still worth comparing widely

Online lenders tend to offer the lowest interest rates. For many borrowers, that may be enough to make them a leading option. But it’s still worth comparing a wide range of lenders to find the loan that best suits your needs, because the gap between online lenders and larger banks is not always large, and a larger bank could still offer the best fit depending on your circumstances.

The home loan market is described as highly competitive, with rates changing as lenders anticipate shifts in the cash rate. In this environment, shopping around and comparing both rates and loan structures can make a meaningful difference.

How to narrow down your shortlist

If you’re comparing home loan rates in Australia—whether you’re buying your first home or refinancing—start by identifying what you need from the loan, then compare products within the right category for your borrower type and repayment structure.

• Choose the right comparison set: compare like-for-like (owner occupier vs investor, variable vs fixed, P&I vs IO).

• Look at the rate and the fees together: a low rate can be offset by ongoing fees, while a higher upfront fee may be acceptable if ongoing costs are low.

• Decide which features matter: offset accounts, redraw, and the ability to make extra repayments can change the overall value of a loan.

• Consider timing and certainty: fixed rates can offer repayment stability; variable rates may offer flexibility; and in urgent situations, approval speed may be the priority.

• Ask about discounts: if you’re in a good financial position, it may be worth requesting a better rate.

Where mortgage brokers can help

Mortgage brokers are professionals who have access to a panel of lenders. They can help match a product to your financial needs and assist with the application process. In more complex situations—such as managing multiple properties, balancing owner-occupied and investment lending, or navigating nuanced borrowing power rules—speaking with a qualified mortgage broker can be especially useful.

Bottom line

The best home loan rate in Australia is the one that delivers the right balance of interest rate, fees, and features for your borrower type and goals. Low rates matter, but so do the costs you pay over time and the tools you need to manage your mortgage effectively. By comparing like-for-like products, considering whether features such as offset accounts will genuinely benefit you, and factoring in fees and approval timelines, you can make a more informed choice—whether you’re buying your first home, refinancing, or investing.