Best Home Loan Rates

How low can you go? The best home loan rates on offer to you right now.

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, updated on August 7th, 2023       

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The market for home loans at the moment gives aspiring borrowers a relative glut of options to choose from. However, you should always look a bit deeper to find the gems that lay within and compare the top lenders you’re considering. We’ve compiled some of the best home loan interest rates for you to consider when comparing which lender to go with.

How do I find the best home loan rate?

The short answer is that you need to do your research before choosing your home loan. Doing your own background searching is a great place to start and will yield a multitude of results from a wide variety of sources, but only reading about the first one or two lenders that popped up will more or less be a shot in the dark which you can’t afford to make. Even if one of these turns out to be the home loan you go with, it’s always better to be able to cast a wide net for lenders to look into.

The key for anyone researching home loans is to compare between lenders and types of loans. Savvy is a great place to start, as a glance at our rates table show the loans on offer right now that we think could be great deals for you. However, while interest rates are a key piece of the puzzle, they are just that: a piece. There are a variety of other factors that you’ll have to consider before making your final decision. If you’re wanting to know what to look for in terms of comparison points, some of the most important areas (in no particular order) include:

Interest rates
The star of the show when it comes to home loan advertisements, lenders will always ensure this number is as bold and central as possible. In this respect, they’re perhaps the easiest element of home loans to compare. They’re likely to differ quite significantly between lenders, so it’ll be simple to pick out a favourite in the pack. There are different ways you can choose to set up the interest rate on your home loan, which we’ll discuss later on. As of the time of writing, home loan interest rates have fallen across the country and are generally sitting between 2% and 3%, with some lenders offering even lower rates.

You’ll find these are generally more well-hidden by lenders compared to interest rates, but the best home loans are separated from the rest by their better fees. Every borrower will have to pay fees on their home loan, but you can cut down on how much money you’ll have to devote to fees by analysing home loans closely. Payments such as application and ongoing monthly fees are often able to be negotiated, and can be waived entirely.

There’s a simple way to compare fees between home loans, and that’s through their comparison rate. This is a figure that adds what you’ll have to pay in fees on top of your interest rate to give you a better sense of your overall repayment. These will always be listed on lender sites, so keep your eye on comparison rates for a general idea and contact lenders for questions about individual fees.

You’re not limited to banks and credit unions when it comes to searching for home loans. While they’re generally the most well-known, borrowers also have the option of going to a non-bank lender, which tend to function online. Home loans from these lenders are often known to contain more affordable rates and fees, as well as offering a more personal service to their customers. However, the products offered are typically more limited than banks and they may not be qualified to accept deposits.

You can start to compare options like these on Savvy, as we assess the best home loan rates to help inform your decision, while a mortgage broker could also work for you if you’re unsure about where to look.

Loan-to-value ratio (LVR)
LVR is the figure used to calculate what a lender’s home loan offering is as a percentage of your property’s value. For example, if you’re looking to buy a house valued at $600,000 and wanting to apply for a $500,000 home loan, the LVR would be 83%. Your LVR will also be shaped by how much you can afford as a deposit on your property. Lenders will have different policies when it comes to LVR, with many not accepting loan applications with an LVR below 80% while others may be willing to accept as high as 95% LVR applications.

What type of interest rate is the best for my mortgage?

Whether your interest rate is fixed, variable or split will be a contributing factor to how much your monthly repayments will cost. Let’s break down the ways you can configure your home loan’s interest rate and how that can affect you.

Type of home loan What it is and how it works Things to like Areas to consider
Fixed rate home loan
This type of home loan locks in its interest rate for a pre-determined period, usually up to five years.
This means that you’ll know exactly how much interest you’ll be paying over that period, which is useful for planning out your finances well into the future. Having the surety of the same payments over the course of the fixed term is appealing to many potential customers, as they might not wish to leave such a massive financial commitment at the mercy of the market.
You could lock yourself into a rate that ends up being quite poor with no way of taking advantage of it unless you pay your way out of the loan with a hefty break fee. Also, if you’re looking for the flexibility of making early or extra repayments, a fixed rate might not be the one for you. These loans typically will be strict on keeping your repayments to one-month intervals and may charge you a fee for submitting a payment outside of this system.
Variable rate home loan
Unlike their fixed cousins, variable rate home loans are dictated by fluctuation (or lack thereof) in market rates at any given time.
The major benefit of these loans is that your rate can drop and save you money on your repayment. Australians typically go for variable rate home loans because of the ability to make repayments outside of the once-monthly cycle, which allow borrowers to save considerably on interest and fees that might’ve been paid for the extra months or years that their loan was meant to run.
However, the variable rate means that your repayments can vary on a monthly basis, throwing the prospect of budgeting through a bit of a loop. Also, interest rate rises will impact your repayments on a variable rate home loan.
Split rate home loans
For a split rate home loan, the lender will divide the loan amount into fixed and variable portions.
This adds flexibility for the borrower, as they can decide what percentage of their loan will be fixed and the percentage of variable loan. Split rate home loans present the positives of both types of interest, as borrowers can make added repayments while also having the security of knowing how much they’ll pay in interest month to month.
Separating your loan in two will mean that you’re effectively paying fees and interest on two smaller mortgages, which can pile up. Furthermore, the fixed portion of your home loan can complicate things if you’re looking to move to another loan. You’re likely to be hit with a hefty break fee if you look to make the switch. There’s also always the notion that if you get your split wrong, you could end up costing yourself quite a bit of money.

How can LVR help me get the best home loan rate?

Generally, lenders will be more willing to offer better rates to borrowers with lower LVRs, particularly those below 80%. We’ll use an example to demonstrate how you can save with a lower LVR. You’re looking to buy a house worth around $500,000 but you’re not sure how much to put up as a deposit. You speak with a lender and they explain to you that you can get a 3% interest rate with a 15% deposit ($75,000), plus Lender’s Mortgage Insurance, but they’re willing to offer you a 2.25% interest rate if you can bring your deposit up to 20% ($100,000). The price breakdown might be as follows:

Deposit Amount owed Interest rate Monthly repayments LMI Total interest paid Total repaid
*Estimates calculated on a repayment term of 30 years. Doesn’t include additional fees.

Best features to consider when comparing home loans

Top tips on how to get approved for the best home loan rates

Assess your credit rating

Lenders will always look to your credit history and current finances when assessing your application, so ensuring that your credit report reads well is of paramount importance. This can be done by paying off any existing debts, cutting down on unnecessary spending and maintaining a consistent, stable income stream.

Maximise the amount you pay for your deposit

The less you pay for your deposit, the better it is for all parties. While an increased deposit means less to repay (lower repayments, less overall interest paid), it also reduces a lender’s feeling of risk in putting up their money for the purchase. If you’re able to pay a deposit of at least 20% the property’s value, you can open yourself up to the top interest rates.

Ensure you meet the lender’s criteria

Each lender will have a list of eligibility criteria that every potential borrower must meet before proceeding with their application. It’s advisable to check these in advance to make sure that you’re not wasting your time with an application you won’t be approved for.

Try to negotiate the best home loan rate with your lender

Despite what you may think, there is room for you to haggle over interest rates with your chosen lender. If you’re looking to go with your current financial institution, this could help you access the best home loan rates. If not, though, you can still negotiate a deal with your lender. Remember that lenders are just as keen to gain you as a customer as you are to secure a home loan.

Frequently asked questions about home loans

What are the best home loans for me if I’m self-employed?

Some lenders will offer low doc or self-employed home loans for that very purpose. These will typically function in the same way as regular personal loans, but the way in which you’ll have to submit an application (i.e. the required documentation) will be more suitable for someone who is self-employed. However, the deposit, interest rates and fees for this type of loan can be higher than the standard rates. 

If I’m a first home buyer, can I still be approved for a good home loan interest rate?

Yes – like anyone else, first home buyers can be successful in their application for a home loan with a great interest rate. If you’ve shown that you’re responsible with your funds and are adept at saving, that’ll be reflected in your credit score and will impress lenders as a result.

Will my credit score affect the best interest rate that I’ll be offered for my home loan?

Yes – lenders always want to know that the money that they give to you will be paid back, so they’ll be more reluctant to offer top interest rates to customers with a less than perfect interest rate. Generally, the lower the credit score, the more that you’ll be offered in terms of interest or fees. This doesn’t mean that you won’t be approved for any home loans if you have bad credit, though. 

If I’m a low-income earner, can I still be offered the best interest rates?

Yes – provided that you meet the lender criteria regarding a strong savings and borrowing history, and you’re borrowing within your means, you can access the best home loan rates as a low-income earner.

Who are the best mortgage rate lenders in Australia?

You’ll be able to find Australia’s top interest rates across all different types of lenders: banks, credit unions, non-bank lenders and online lenders. Generally speaking, interest rates for smaller lenders are likely to be more affordable than those offered by big banks, but that’s certainly not a one size fits all solution. You may find a big lender who offers the best rate on the kind of home loan that you’re looking for. The key here is to research as much as you can before committing to what you think may be the best interest rate on first glance. The Reserve Bank of Australia tracks the average interest rates for lenders, so you can access them to get an idea of where your home loan rate fits in with the best.

Can a mortgage broker help me find the best home loan rates?

If you decide to go with a mortgage broker, they can often help you find and access rates that you may not have found yourself. They'll be able to take your personal financial situation into account when seeking out the best home loan rates for you.

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