- Home loan rates have seen falls this week as housing market activity stagnates
- A handful of mid-tier and smaller lenders have cut rates or launched special offers
- New home borrowing has been hit by higher interest rates, investor housing tax changes, and low buyer confidence
Home lenders are starting to drop their interest rates amid a housing market slump not seen since the rapid interest rate climb of 2022.
While retail lending rates are largely tied to the Reserve Bank's cash rate, lenders can also choose to adjust rates outside the cycle for market reasons.
With the national housing market in a marked downturn, it's no surprise some mid-tier and smaller lenders are reducing rates in a bid to stimulate some business.
What's behind the property market downturn?
Property analysts say the housing market was already feeling the effects of three cash rate increases in 2026 before investor housing tax changes were announced in the May federal budget.
The changes to negative gearing and capital gains tax triggered a 20% fall in Westpac's investor loan applications in just the first three weeks after the budget was handed down.
The other big four banks have not revealed their figures but analysts believe they would be similar.
Overall, it seems buyer confidence has been shaken with some capital city auction clearance rates dropping to lows of just over 40%.
Cotality monthly property data, released this week, shows falling Sydney and Melbourne home values continue to lead the national downturn.
The previously high-performing mid-sized capitals also lost steam, with growth slowing in Brisbane and Perth while Adelaide's home prices were flat over the month.
Cotality said weak demand is driving home values lower.
See also:
- Australia's housing boom hits a wall as prices tip and profits peak
- RBA hits pause but housing slowdown still gaining speed
Where does it leave home lenders?
Banks and lenders have seen robust growth in new lending in recent years, particularly investor lending which reached record levels in late 2025.
Even before the federal budget was handed down, new lending in the first quarter had dropped on the back of climbing interest rates.
Big bank economists have all revised down their housing market forecasts which, unsurprisingly, will also see lender revenues hit.
Market investment analysts are cutting share price forecasts for the major banks on the back of falling home lending.
Some mid-tier lenders ANZ-owned Suncorp and the regional Bendigo Bank have responded by dropping home loan rates while smaller lenders are also pushing rates lower in a bid to lure any bites from borrowers.
Bendigo Bank cuts online home loan rate
Bendigo Bank, Australia's seventh-largest owner-occupier home lender, has boldly dropped its lowest, online-only variable interest rate by 15 basis points to 5.89% p.a. (6.02% p.a. comparison rate*).
Bendigo's Express Variable Home Loan rate is available to owner occupiers making principal and interest (P&I) repayments with a loan-to-value ratio (LVR) up to 80%.
An out-of-cycle 15 bp drop to a variable rate is a notable move and signals the regional bank is keen for new business.
Suncorp also drops variable rates
Suncorp, the country's eight-largest home lender, also made cuts to its lowest-rate basic home loan the previous week.
Suncorp shaved its Back to Basics rates by one or two basis points (depending on LVR) with its lowest rate 6.08% p.a. (6.09% p.a. comparison rate*) for new-to-bank owner occupiers with 60-70% LVR.
That's a special offer discounted rate for new borrowers who also take up a Suncorp transaction account while they're at it.
The special offer investor rate is 6.18% p.a. (6.19% p.a. comparison rate*) for LVRs 60% or less.
At the same time, Suncorp also cut its fixed home loan rates for owner occupiers and investors by up to 80 bp.
AMP Bank drops variable, fixed rates
AMP Bank has also dropped select variable rates by up to 20 basis points and it should be no surprise investor rates have seen the biggest cuts.
AMP has sliced variable rates on its higher LVR Essential Home Loans (90-95% LVR) and Professional Package loans (over 80% LVR).
It's also cut the rate on its SuperEdge interest-only SMSF loan, presumably in a bid to attract borrowers looking to finalise property transactions before the federal government's ban on SMSF lending for residential property takes effect in mid-August.
See also: SMSFs in race to finalise residential property purchases
While it was at it, AMP took the opportunity to reduce its Essential Home Loan and Professional Package fixed rates by up to 50 basis points.
P&N/BCU Bank launch discounted rate offer
Western Australian-based P&N Bank is offering a 20-basis point discount to new customers taking out its Basic Variable Home Loan online.
The promotional offer applies to owner occupiers with LVRs of 80% or less who initiate their home loan or refinancing applications via its website.
P&N's banking partner BCU Bank is also offering a 10-basis point discount on its standard OMG Home Loan rate for new customers with up to 80% LVR applying online.
Other rate cuts
Here's a rundown of other lenders also sending their rates lower this week:
- Bank of Sydney cut its Expect More Variable Rates by 10 basis points for borrowers with less than 50-60% LVR loans
- Bank of China launched a special offer discount rate for new owner occupier borrowers of 5.93% p.a. (6.31% p.a. comparison rate*) and new investors 6.13% p.a. (6.33% p.a. comparison rate*)
- Banking partners People First Bank and Heritage Bank have sliced up to 15 basis points off their fixed-rate loans for owner occupiers and investors
- Summerland Bank also trimmed owner occupier and investor fixed rates by up to 17 basis points
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
