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Compare the Best Variable Rate Home Loans

  • Compare variable home loan rates from 5.75% (comparison rate^ 5.88%)
  • Find the best variable home loan rates from popular lenders in Australia

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Best variable home loan rates in Australia (2024)

Compare the best variable home loan rates in Australia, starting from 5.75% p.a. (comparison rate^ 5.88%). Check your eligibility with 26 lenders online, instantly. We display all variable rate loans on our database and we’re not paid by lenders if you click through to their website. The table is sorted by lowest regular repayment. Use the filters to search for your best variable home loan. Read the comparison rate warning and other important information.

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Rates updated 10 October 2024

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Variable-rate loan news - October 2024

Peter Drennan

Peter Drennan, Money's Research & Data Expert

"The gap between variable and fixed rates has narrowed to less than 0.2%. This is due to lenders adjusting their expectations for the cash rate to remain on hold in the medium term. This also reduces the likelihood of people refinancing, as there’s less financial incentive to do so."

Peter Drennan, Money's Research & Data Expert

What is a variable rate home loan?

A variable home loan has an interest rate that can go up or down over the loan term — normally in line with changes to Australia’s official cash rate.

This means your mortgage repayments will be lower when interest rates drop but higher when interest rates go up. It’s different to a fixed rate home loan where the rate (and therefore your repayments) remain the same for a set period.

Most variable rate home loans allow you to make extra repayments on your mortgage to pay it off faster, and many come with extra features such as offset and redraw facilities.

According to the Reserve Bank of Australia (RBA), the majority of new owner-occupier loans in Australia (98.6%) are variable. Variable rates are available on owner-occupier and investment home loans.

The RBA Board meets eight times a year to review the cash rate . The cash rate is the interest banks and lenders pay on the money they borrow from other banks. It influences the interest rates paid by consumers, including on home loans and savings accounts.

Will variable home loan interest rates go down in 2024?

Australia's big four banks have revised their interest rate forecasts, now predicting that the RBA won't cut rates until 2025. However, Reserve Bank Governor Michele Bullock said the central bank won't hesitate to lift interest rates again to reduce ‘persistently high inflation’.

Mansour Soltani home loan expert

Mansour Soltani , Money's home loan expert

“Make extra repayments on your variable rate home loan when interest rates are low. When interest rates are lower, the principal component of your repayments is bigger, helping you smash down your loan faster. When interest rates are higher, it’s inverted, and the interest component of your repayments is bigger so your cents and dollars don’t stretch as far. However, we always recommend consistency as you never know which way interest rates will go.”

Mansour Soltani , Money's home loan expert

What are the current variable mortgage rates?

  • The lowest variable home loan rate on Money’s database is: 5.75% (comparison rate 5.88%). *Based on an owner-occupier loan (with P&I repayments) and a maximum 60% LVR.
  • Based on the RBA’s Housing Lending Rates, the average variable home loan rate is: 6.27% p.a.

The best variable rates will vary depending on the type of home loan you need (owner-occupier or investor) and your loan-to-value ratio (LVR). Lenders see LVRs lower than 80% as less risky because you’re borrowing less compared to the property's value. Lower LVRs typically mean lower rates, and higher LVRs mean higher rates.

That’s why it’s important to compare loans based on your situation, as the rates lenders advertise may not reflect your borrowing position.

Types of variable home loans explained

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Basic variable home loan

This is a no-frills variable home loan with limited features but a lower interest rate. For example, a basic home loan may have a discount of 0.10% p.a., compared to a lender’s other products with no offset account or redraw.

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Introductory discount home loan

This type of home loan comes with a discounted ‘honeymoon’ interest rate for a period of time (usually 1-3 years), and then reverts to a higher variable rate.

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Standard variable home loan

This is the typical type of variable home loan lenders offer. It comes with all the standard features you’d expect (e.g. offset, redraw) at a standard variable rate. A lender’s standard variable rate is often used as the default interest rate that applies when a borrower’s fixed-rate term ends.

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Package home loan

This combines your variable rate home loan with a transaction account and other financial products, like credit cards, in exchange for a discounted interest rate or reduced fees on each product.

When should you choose a variable interest rate on your home loan?

Here are three scenarios where choosing a variable rate home loan could be suitable.

1

Rates are expected to drop in the near future

Opting for a variable rate home loan when there are predictions or indications that interest rates may decrease means you could benefit from lower repayments sooner, compared to if you were locked into a fixed-rate mortgage with hefty break costs to pay. Keep in mind that rate changes are difficult to predict. This is an area where getting advice is a good idea.

2

You want access to home loan features to pay your mortgage off faster

Variable rate home loans generally offer additional features such as offset accounts and the ability to make extra repayments without penalty. These features can help you pay off your mortgage faster and reduce your interest payable over the life of the loan.

3

You want the option to refinance without incurring fees

Variable rate home loans typically offer more flexibility when it comes to refinancing. If you anticipate changes in your financial situation or want to take advantage of better loan terms in the future, having the option to refinance without incurring break fees can be attractive. This flexibility also allows you to take advantage of lower interest rates or better loan features if you spot a better deal elsewhere.

Are variable rates cheaper than fixed rates?

Based on Money’s analysis of Australia’s big four banks, the lowest rates available are generally fixed but this may be lenders pricing their products in anticipation of rate drops down the track. The caveat here is that variable rates could change and if you have locked into a fixed rate, it may not remain the cheaper option over time.

Mansour Soltani home loan expert

Mansour Soltani , Money's home loan expert

“One thing you can bet on is that the banks have already priced in which way they think the market is headed into their fixed rate. They’re hoping borrowers will fix their rate purely based on wanting peace of mind. The best time to fix is when the market is not so volatile, and banks offer a great rate close to the variable. When the fixed and variable rates gap is too large like in 2024, I would choose variable."

Mansour Soltani , Money's home loan expert

How a rate change can impact your variable rate home loan repayments

Interest rate

Loan amount

6.00%

$600,000

6.25%

$600,000

Interest rate

Loan term

6.00%

25 years

6.25%

25 years

Interest rate

Monthly repayments

6.00%

$3,865

6.25%

$3,958

Interest rate

Interest over the life of the loan (if you remain on the same rate)

6.00%

$559,743

6.25%

$587,405

Interest rate6.00%6.25%

Loan amount

$600,000

$600,000

Loan term

25 years

25 years

Monthly repayments

$3,865

$3,958

Interest over the life of the loan (if you remain on the same rate)

$559,743

$587,405

Even a small difference in your rate can have a big impact on your home loan repayments and overall interest payable. The table above shows the monthly repayments and total interest paid over a 25-year loan term for a $600,000 loan with a variable interest rate of 6.00% versus 6.25%. Note: This is a general comparison and does not include all fees or charges that may apply.

In this example, a 25 basis point (0.25%) rate change could mean:

  • A $93 difference in monthly repayments, totaling $1,116 annually.
  • A $27,662 difference in the total interest payable over the life of the loan.

Variable rate home loan features

An offset account is a transaction account linked to your home loan that offsets your home loan balance. You can have a 100% offset where every dollar in that account offsets what you owe on your mortgage and your interest. So, if you have a $600,000 mortgage and $20,000 in your offset account, you'll only be charged interest on $580,000. Alternatively, you can have a partial offset where only a percentage of your account balance offsets your loan balance.

Most variable rate home loans allow you to make additional repayments without penalty fees. This makes it easier to pay down your loan faster and save on interest.

Allows you to withdraw any additional repayments you've made on your home loan. It frees up cash and provides flexibility in managing finances. You can withdraw additional repayments for any reason.

You can choose your repayment frequency (e.g. weekly, fortnightly, or monthly) or opt for an interest-only repayment option for a period of time.

This feature allows you to transfer your existing loan to a new property if you decide to sell and buy a new home.

You can split your home loan into fixed and variable portions, balancing stability and flexibility.

Variable rate home loan pros & cons

Pros
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  • Your repayments decrease with rate cuts
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  • Freedom to make additional repayments and redraw
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  • Easier to refinance with no break fees
Cons
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  • Your repayments may increase if rates go up
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  • The unpredictability of variable rates can make it hard to budget or manage repayments
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  • You may feel the need to re-evaluate your home loan more often to ensure you’re on a competitive rate

How to compare variable home loans

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Compare the advertised rate

The advertised rate is the initial interest rate lenders promote, which is a good starting point to estimate your monthly repayments. Your actual individual rate may be different depending on your LVR and loan amount. A lower interest rate means lower repayments and less interest paid in total. Even a 0.10% difference in your rate could save you thousands of dollars on your home loan. Look for the best variable rates from the big four banks and smaller lenders.

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Check the comparison rate too

The advertised interest rate doesn’t give you the full picture of your borrowing costs. Lenders must also show a comparison rate. This estimates the annual cost of a home loan — including fees and interest. It’s designed to offer a more accurate comparison across different lenders and products. However, the comparison rate is always calculated by lenders based on a $150,000 loan amount and a 25-year term which won’t be realistic for all borrowers.

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Consider home loan fees

Home loan fees can be the equivalent of up to 1% of your loan amount, so it’s important to consider how they will impact your bottom line. Most lenders charge standard fees to open and maintain your home loan account and additional fees like redraw fees, late payment fees, early termination fees, etc. You can often negotiate with your lender to waive some of these.

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Choose the right home loan features for your needs

Choose a variable loan with features that will help you save interest on your home loan and pay it off faster. Look for an offset account, additional repayments option, and redraw facility to start with. These are the most commonly-used features, according to Mansour. Remember, some home loan features come with fees. Make sure to weigh up fees against the benefits the feature provides.

Home loans guides & resources

What's the next step on your property journey? Our home loan guides will help you navigate the road ahead, whether you're buying, building or looking to save on an existing loan.

FAQs about variable rate home loans

Lenders use the same formula to calculate variable and fixed interest:

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  • Your home loan balance is multiplied by your interest rate, and divided by 365 (days) to calculate your daily interest.
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  • Your daily interest totals each day in a month are added together to arrive at the monthly interest amount.
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  • The calculated interest forms part of your repayments based on your chosen frequency (e.g. weekly, fortnightly, or monthly).

For a home loan of $600,000 with an interest rate of 6.00% p.a. and monthly repayments, the calculation might look like this:

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  • 600,000 x 0.06 / 365 = 98.63 in daily interest
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  • $98.63 x 30 days = $2,958.90 in monthly interest

Your interest payable reduces each month as your home loan balance reduces, assuming your interest rate stays the same.

The amount of interest you’re charged can fluctuate with a variable rate but also based on the number of days in a month. Since interest is calculated daily, longer months (with 31 days) will result in higher interest.

You can choose a variable rate on most owner-occupier and investor home loan products. The minimum eligibility requirements include:

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  • Australian citizenship or permanent residency (or being married or in a de facto relationship with an Australian citizen or permanent resident)
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  • You must be over 18 years of age
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  • Meet the lender’s minimum income threshold
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  • Have a deposit or equity to contribute towards the purchase of the home

Variable rate mortgage

The interest rate and repayments on a variable rate home loan go up and down over time. A variable home loan provides the flexibility to make unlimited additional payments and features that reduce your interest bill. There are usually no penalties for paying off a variable loan early or switching to a fixed or split home loan.

Fixed rate mortgage

A fixed home loan has a fixed rate and repayments for a period of time (1-5 years typically). This gives you certainty over your repayments and protection from sudden rate increases during the fixed rate period. However, some fixed rate loans don’t allow you to make additional repayments without penalty, and you may not have access to extra features like an offset account or redraw.

Exiting a fixed rate loan before the fixed period ends will typically mean you will incur break costs. Depending on your loan amount and your remaining fixed term, this could amount to hundreds or thousands of dollars in break costs.

Choosing whether you should go variable or fixed will depend on your financial situation, current market conditions, and what lenders are offering at any given time. If you’re unsure you can speak to a mortgage broker about your options.

Switching to a variable interest rate will happen automatically after your fixed rate expires. If you decide to switch to a variable home loan (or split your home loan) before your fixed term ends, you may incur break costs. You may also have to pay refinancing fees as you’d essentially be taking out a new home loan to pay off your current one.

If you're considering switching from a fixed rate home loan to a variable rate loan, weigh the benefits against the break fees and other expenses. You might find it will be cheaper to wait until the fixed period ends. Alternatively, you may find that switching now could save you more money in interest over the long term (e.g. if you secure a lower interest rate or get access to features that can help you save on interest), despite break costs.

It can be difficult to ‘beat the banks’ and predict which way rates will go, as it depends on various economic factors like the inflation rate, employment figures, and the overall performance of the Australian economy, to name a few.

Historical trends can provide some indication but aren’t accurate predictors of future rate movements. It’s best to pay attention to statements from the RBA, or ask a mortgage broker who may have a good sense of which way rates are moving.

Banks can theoretically change rates on their variable home loans at any time. But, you’re more likely to see changes in your mortgage rate after the RBA announces an adjustment to the cash rate.

When the cash rate changes, lenders typically adjust the variable interest rates on their mortgages in the same direction (up or down) as the cash rate decision. Historically, cash rate changes (and subsequently rates on variable home loans) have occurred in 0.25% or 0.50% increments, although there is no set limit.

Your lender will generally send you a letter in advance (usually via your online banking) to inform you when your variable interest rate is changing and how it will affect your home loan repayments based on your current home loan balance.

The Reserve Bank of Australia (RBA) changes the official cash rate

This is the biggest factor influencing variable rates on home loans. When the RBA adjusts the cash rate, it affects lenders’ borrowing costs, which are typically passed on to borrowers, either in full or partially. Each lender has the discretion to decide whether, and by how much, to adjust their rates.

How the Australian economy is performing

Supply and demand for credit, consumer spending, employment figures, and inflation, all of which are indicators of economic performance, can influence interest rates. The RBA is responsible for monetary policy in Australia and will take into account these factors when setting the target cash rate.

Competition in the market

Lenders may adjust their interest rates to remain competitive in the market or follow market trends. For example, if the major banks increase or decrease their rates, other lenders tend to follow in the same direction. These are known as ‘out-of-cycle’ rate changes.

Yes, you can generally make additional repayments and pay off your variable rate home loan early without penalty. It will depend on the lender and the terms of your contract.

If you can’t decide between a variable or fixed rate home loan, you can ‘hedge your bets’ and opt for a split home loan. This can help manage the impact of interest rate rises with a fixed portion, while still offering the flexibility and features of a variable rate loan. You can choose the proportions of your split, whether it's 50/50, 60/40, or 70/30.

Megan is a finance writer with more than 10 years of experience in the industry. She’s passionate about helping people make sense of financial topics and principles. She's certified in Finance & Mortgage Broking and is compliant to provide general advice in Tier 1 General Insurance.

Mansour Soltani is Money.com.au’s home loans expert. He’s a mortgage broker with more than 20 years of experience in the finance and real estate industry. Mansour is the Director of Soren Financial and has been featured in publications such as the ABC, Domain.com.au and Australian Broker.

Important information

Home loan comparison rates are calculated based on a loan amount of $150,000 repaid over a 25-year term with monthly repayments. The comparison rates only apply to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan. Check with the provider for full loan details, including rates, fees, eligibility and terms and conditions to make sure the product is right for you.

General information only

The information on this page is general in nature and has been prepared without considering your objectives, financial situation or needs. You should consider whether the information provided and the nature of any home loan product is suitable for you and seek independent financial advice if necessary.

We are not providing you with a recommendation or suggestion about a particular home loan. You should read the relevant disclosure statements or other offer documents before deciding whether to apply for or continue to use a particular product.

What products, features and information are shown

While we make every effort to ensure all home loans available in Australia are shown in our comparison tables, we do not guarantee that all products are included.

Our product comparisons may not compare all home loan features and attributes relevant to you.

Product information, such as interest rates, fees and charges, is subject to change without notice. Before acting on any information, you should confirm the relevant product information with the lender.

How home loans are sorted and filtered by default

Users can easily change the sort order and apply product filters to our product comparison tables. However, when you arrive on a page initially, by default home loans are sorted by:

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  • Lowest regular repayment amount, then;
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  • Loans interest rate, then;
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  • Lowest comparison rate, then;
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  • Provider name (A-Z)

Some home loan products listed in our tables are available through a mortgage broker. These are the products with an option to ‘Check Eligibility on Money.com.au’. Mortgage brokers may not be able to offer loans from every provider and there may be more suitable loans for your personal circumstances.

Mortgage brokers are not authorised by Money's Australian Credit Licence and operate under their own Australian Credit Licence, or as a credit representative of another Australian Credit Licensee. Mortgage brokers can make recommendations about home loan products that may suit your objectives, financial situation and needs.

Our tables feature all home loans available from lenders on our database that match the search criteria selected. Lenders do not pay to feature in our tables, nor do we earn commission if you click to visit a lender’s website. The order of the products in the table is not influenced by any commercial arrangements.

If you get help from a mortgage broker as a result of visiting this page, we may earn a commission.

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Interest rates, fees and charges are subject to change without notice. Before acting on any information, you should confirm the interest rates, fees, charges and product information with the provider. For clarity, where we have used the terms “lowest” or “best” these relate solely to the rates of interest offered by the provider and not on any other factor. The application of these terms to a particular product is subject to change without notice if the provider changes their rates.

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Assumptions:

  • The calculations do not account for changes in interest rates or other market conditions that may occur.
  • Results are approximations and may differ from actual payment schedules or amounts.
  • The calculator does not include all fees and charges that you may incur in relation to a financial product.

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