Low home loan interest rates for October 2019

William Jolly By on October 2, 2019
 

Looking to dip into the property market soon, or to refinance? Savings.com.au has collated some of the lowest home loan rates on the market right now. 

We’ll be comparing the snapshot of the lowest home loan rates available for:

Whether you’re looking to buy your first home, buy another one for your family, or refinance your current home loan to a better value one, Savings.com.au has compiled some of the lowest home loan interest rates available on the market this month for owner-occupiers (not investors). 

Variable home loans (principal & interest)

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Purchase or Refi, 80% P&I Smart Home Loan 2.88% 2.90% $1,660 More details
Discount Variable 80% 3.07% 3.09% $1,702 More details
Low Rate Home Loan w/Offset 3.15% 3.17% $1,719 More details
Base Variable Rate Special 3.20% 3.24% $1,730 More details
Simplicity Plus Plus 80% Special Offer 3.24% 3.28% $1,739 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Purchase or Refi, 80% P&I Smart Home Loan
2.88% 2.90% $1,660
More details
Discount Variable 80%
3.07% 3.09% $1,702
More details
Low Rate Home Loan w/Offset
3.15% 3.17% $1,719
More details
Base Variable Rate Special
3.20% 3.24% $1,730
More details
Simplicity Plus P&I 80% Special Offer
3.24% 3.28% $1,739
More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 17 October 2019. View disclaimer.

Variable home loans (interest-only)

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Real Deal IO Special Offer 80% 3.32% 3.33% $1,107 More details
Low Rate Home Loan w/Offset 3.40% 3.42% $1,133 More details
Great Rate Discount Variable 3.57% 3.58% $1,190 More details
Budget Owner-Occupied IO 3.61% 3.49% $1,203 More details
Simplicity Plus Special Offer 3.92% 3.93% $1,307 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Real Deal IO Special Offer 80%
3.32% 3.33% $1,107
More details
Low Rate Home Loan w/Offset
3.40% 3.42% $1,133
More details
Great Rate Discount Variable
3.57% 3.58% $1,190
More details
Budget Owner-Occupied IO
3.61% 3.49% $1,203
More details
Simplicity Plus Special Offer
3.92% 3.93% $1,307
More details

Base criteria of: a $400,000 loan amount, variable, interest-only (IO) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 2 October 2019. View disclaimer.

Fixed home loans (principal & interest)

Provider Ad rate p.a. Comp rate* p.a. Monthly repayments  
Great Rate Discount Fixed 1yr 2.79% 3.94% $1,641 More details
Fixed OO P&I 3yrs 2.98% 4.39% $1,682 More details
Fixed Rate 2yrs OO P&I 2.98% 4.50% $1,682 More details
Residential Fixed P&I 2yrs 90% 2.99% 3.55% $1,684 More details
Breakfree Residential Fixed 2yrs 3.18% 4.59% $1,725 More details
Ad rate p.a. Comp rate* p.a. Repayments
Great Rate Discount Fixed 1yr
2.79% 3.94% $1,641
More details
Fixed OO P&I 3yrs
2.98% 4.39% $1,682
More details
Fixed Rate 2yrs OO P&I
2.98% 4.50% $1,682
More details
Residential Fixed P&I 2yrs 90%
2.99% 3.55% $1,684
More details
Breakfree Residential Fixed 2yrs
3.18% 4.59% $1,725
More details

Base criteria of: a $400,000 loan amount, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 2 October 2019. View disclaimer.

Fixed home loans (interest-only)

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Great Rate Discount Fixed IO 1yr 2.89% 3.95% $963 More details
Residential Fixed 3yrs 2.99% 4.46% $996 More details
Residential Fixed IO 3yrs 3.09% 4.27% $1,030 More details
Residential Fixed IO 1yr 3.29% 4.53% $1,096 More details
Breakfree Residential Fixed 2yrs 3.79% 4.70% $1,264 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Great Rate Discount Fixed IO 1yr
2.89% 3.95% $963
More details
Residential Fixed 3yrs
2.99% 4.46% $996
More details
Residential Fixed IO 3yrs
3.09% 4.27% $1,030
More details
Residential Fixed IO 1yr
3.29% 4.53% $1,096
More details
Breakfree Residential Fixed 2yrs
3.79% 4.70% $1,264
More details

Base criteria of: a $400,000 loan amount, fixed, interest-only (IO) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 2 October 2019. View disclaimer.

Variable P&I home loan with offset**

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Low Rate Home Loan w/Offset 3.15% 3.17% $1,719 More details
Real Deal P&I Special Offer 3.32% 3.33% $1,756 More details
Achieve Vairable OO P&I Special 3.33% 3.38% $1,758 More details
Home Advantage Variable 80% 3.37% 3.73% $1,767 More details
Breakfree Variable Special Offer 4.13% 4.53% $1,940 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Low Rate Home Loan w/Offset
3.15% 3.17% $1,719
More details
Real Deal P&I Special Offer
3.32% 3.33% $1,756
More details
Achieve Vairable OO P&I Special
3.33% 3.38% $1,758
More details
Home Advantage Variable 80%
3.37% 3.73% $1,767
More details
Breakfree Variable Special Offer
4.13% 4.53% $1,940
More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 2 October 2019. View disclaimer.

Variable construction loans

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Discount Variable 150k+ 80% 3.22% 3.24% $1,734 More details
Budget OO P&I 90% 3.31% 3.37% $1,754 More details
Real Deal P&I Special 150k+ 3.32% 3.36% $1,756 More details
Basic Home Loan Special 3.35% 3.36% $1,762 More details
Simplicity Plus <80% Special 3.38% 3.42% $1,770 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Discount Variable 150k+ 80%
3.22% 3.24% $1,734
More details
Budget OO P&I 90%
3.31% 3.37% $1,754
More details
Real Deal P&I Special 150k+
3.32% 3.36% $1,756
More details
Basic Home Loan Special
3.35% 3.36% $1,762
More details
Simplicity Plus <80% Special
3.38% 3.42% $1,770
More details

Base criteria of: a $400,000 loan amount, variable construction home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 2 October 2019. View disclaimer.

The different types of home loan providers we compare

Big four home loan interest rates

The big four banks – ANZ, Commonwealth Bank, NAB and Westpac – dominate the home loan market, holding around 80% of all residential mortgages. This makes Australia’s home loan market one of the most concentrated in the world when it comes to the major banks. What’s more, they have nearly $1.4 trillion in housing loans at the moment, with just under $900 billion of this dedicated to owner-occupied housing.

But there’s been a bit of push lately against banking with the big four, particularly when it comes to home loans. The main argument for this is that their interest rates are often higher than those from smaller institutions.

But are they? Well, take a look at these tables and see for yourself.

Customer-owned home loan interest rates

Customer-owned banks, also called mutual banks, are banks not beholden to shareholder profits. The mutual sector held combined assets of $117 billion in 2018, according to KPMG. This is about 2.5% of total assets across all deposit-taking institutions, although this number has been growing sharply in recent years.

Representatives of customer-owned banks argue that this allows them to pass on profits to customers in the form of lower rates and fees, and there’s definitely some merit to that argument based on some of the rates seen above.

Non-bank home loan interest rates

Banks and mutual banks are classed as ‘authorised deposit-taking institutions’ and are able to offer deposit accounts like savings accounts and term deposits. Non-banks are not able to do this but are still able to offer home loans, many of which still have competitive rates.

You can see some non-banks and their related entities in the tables above, such as Resi, State Custodians, Firstmac and loans.com.au.

How much of a difference does a good rate make?

A lot. 

Let’s take one of the lowest home loan rates in these tables and round it to 3.50%. Now let’s add an extra 1% to this home loan rate to get a home loan at 4.50%. This might seem high considering some of the rates seen here, but the reality is a lot of people are stuck on mortgages with rates even higher than this, and many don’t even realise it. And this extra 1% can make a huge difference. 

Let’s compare two 30-year home loans, at 3.50% and 4.50%. Neither home loan has an introductory rate or upfront or ongoing fees. The table below shows the difference in monthly repayments for various loan amounts.

Loan amount3.50%4.50%Monthly savings at 3.50%Total savings at 3.50%
$300,000$1,347$1,520$173$62,252
$400,000$2,027$1,796$231$83,002
$500,000$2,245$2,533$288$103,753
$700,000$3,143$3,547$404$145,254
$1,000,000$4,490$5,067$577$207,506

The more you borrow the more you pay in interest, and even a small difference in interest rates can add extra tens of thousands if not hundreds of thousands to the overall cost of your home loan.

How to find a good home loan interest rate

If you are willing to switch or are just entering the market, then articles such as this one would be a good place to start. And if this isn’t doing it for you, a quick five-minute Google search unveils an entire world of information at your fingertips.

If you don’t have the time or don’t trust yourself to find a good home loan, then a mortgage broker can do that for you. Bear in mind they might not necessarily get you the lowest rate on the market, but can guide you through the home buying process more quickly and more efficiently. 

If you do decide to go it alone, here are a few things to look for in a home loan interest rate: 

  • Does it have an introductory rate? Many ‘low rate’ loans actually have introductory rates with higher revert rates 
  • If it’s a fixed rate, what’s the break cost? Refinancing from a fixed rate home loan can be expensive, so check the fees on the loan before committing 
  • What are the fees in general? A low advertised rate can have a high comparison rate, due to high ongoing and upfront fees
  • Can you make extra or more frequent repayments? Making home loan repayments more frequently can shave thousands of dollars off your overall loan cost
  • Is it interest-only? Interest-only loans can be much cheaper to start with, but once the interest-only period ends repayments can skyrocket.

Frequently asked questions

1. Should I fix my mortgage?

It depends on your circumstances. Fixed interest rates are often higher than many variable rates, but if you value the security and stability of having fixed repayments for a few years, they may be worth considering. Before locking in your home loan rate for several years, consider whether interest rates are expected to rise or fall in future. One general rule of thumb you could follow is to only consider a fixed loan when the gap between average variable and fixed rates is less than 1% point. Exiting a loan before the end of the fixed period will result in a break fee, which may cost thousands, so if you’re thinking about selling your home or want the freedom to switch home loans, a fixed rate mortgage may not be suitable for you.

2. Is a variable rate of a home loan always higher than a fixed rate?

Not necessarily. As variable home loan rates can rise or fall depending on what’s happening in the market, variable rates may not always be higher than a fixed rate. You’ll find that the average variable rate is actually usually lower than the average fixed rate.

3. How often do variable mortgage rates change?

Variable mortgage rates may rise or fall depending on what the market is doing and at what rate the RBA has set the official cash rate.

4. Can I change my mortgage from variable to fixed?

Switching your mortgage from a variable-rate to a fixed rate can be relatively simple, whereas switching from fixed to variable (before the end of the fixed term) can be much more of a challenge given you will likely face expensive break costs.

5. Can you pay off an interest-only mortgage early?

Just as you can with a variable-rate principal and interest mortgage, it is possible to pay off a variable-rate interest-only mortgage early. This would typically involve either selling the house or making very large voluntary principal repayments.

6. How much deposit do I need for an interest-only mortgage?

Deposit requirements vary by lender, but like principal and interest mortgages, many lenders require a deposit of at least 5% of the property’s value. However, to qualify for some of the lowest rates and to avoid having to pay for LMI, you may need to have a deposit of at least 20%.

7. Can I pay interest-only on a fixed mortgage?

Yes, there are many interest-only fixed- rate mortgages available. Fixed rate interest-only home loans are short-term home loan contracts that only require you to pay off the interest on the amount borrowed and pay at a fixed rate.

8. Can I get an interest-only mortgage as a first time buyer?

Many lenders do offer interest-only mortgages to first time buyer, however, it’s important that first time buyers are fully aware of what interest-only loans are and how they work before applying for one.

Savings.com.au’s two cents 

Why pay an extra $100,000+ because you can’t be bothered to switch to or find a cheaper home loan? 

Don’t become a mortgage prisoner by sticking to a high-rate home loan – refinance to a better one (after carefully considering your options, mind). And if you’re looking for a new home loan altogether, then rates such as these could be a good place to start. 

You can also keep up with the latest home loan rate movements by checking our home loan news page.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in 2018. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

**Offset products include home loans with offset accounts or products that mimic offset accounts, like Loans.com.au’s “redraw offset facility” or Pepper Money’s “offset sub-account”

William Jolly
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.
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