The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.
The cheapest home loans have the lowest rates
The number one factor in determining a cheaper home loan is a low interest rate. The lower the interest rate, the cheaper your monthly home loan repayments will be.
Let's compare 2 otherwise identical home loans with slightly different interest rates.
| Interest rate | 5.30% | 4.80% |
|---|---|---|
| Loan amount | $600,000 | $600,000 |
| Loan term | 30 years | 30 years |
| Monthly repayment | $3,332 | $3,148 |
| Monthly saving | N/A | $184 |
| Annual saving | N/A | $2,208 |
As you can see, with the lower interest rate, you save $184 a month – or $2,208 a year.
How much can you save with a cheaper home loan?
We calculated this by using our loan repayment calculator. Try it out for yourself and see how much you could save.
Why you can trust Finder's home loan experts
You won't pay any more by taking out a home loan with us. Better still, we regularly run exclusive deals that you won't find on any other site – plus, our tables make it easy to compare loans.
We've researched and rated dozens of home loans as part of our Finder Awards. We provide unique insights and our in-house experts regularly appear on Sunrise, 7News and SBS News.
Unlike other comparison sites, we're not owned by a third party. That means our opinions are our own and we work with lots of home loan lenders, making it easier for you to find a good deal.
Since 2014, we've helped 150,000+ people find a home loan by explaining the nitty gritty details simply and clearly. We'll never ask for your number or email. We're here to help you make a decision.
How do you find the lowest mortgage rates on the market?
Every month, we analyse the rates in our database to create a list of the market's cheapest loans.
Every month, we find the lowest home loan rates in our database for 4 different loan types. To ensure these products are not overly restrictive in eligibility criteria, every loan we select must meet the following criteria:
- Loans must be principal and interest loans with a maximum LVR of 80%, meaning you need a minimum 20% deposit.
- Fixed rates have terms of between 1 and 5 years.
- Mortgages are taken from Finder's database, with rates correct at the time of publication (updated every month).
Your interest rate update: May 2023
On 02 May the official cash rate increased to:
3.85%
The lowest owner-occupier loan in Finder’s database is:
5.24%
Assuming the average owner occupier home loan size of $586,366 you would be making monthly repayments of:
$3,145
RBA returns to rate hikes
After a month’s pause, the Reserve Bank of Australia (RBA) has increased the cash rate again. While this isn’t anything new to borrowers, the return of a rate rise is likely to be frustrating news.
The latest inflation figures show a 7% annual increase, which means inflation is finally heading in the right direction. It’s a fall from the last quarterly update and the RBA needs the rate to head back towards the 2-3% target range.
Some economists predicted that with inflation falling the RBA might take the opportunity to pause again and assess the impact the past rate rises would continue to have.
It’s expected that banks and lenders will begin passing on the interest rate increase to borrowers. If you had a rate of 2.00% in April 2022, you’d now be looking at a rate of about 5.75%.
On the average home loan amount of $586,366 that’s a monthly repayment increase of around $1,255.
Rebecca Pike is Finder's senior writer for money. She joined Finder after almost four years writing about mortgage and finance, including three years as editor of Mortgage Professional Australia.
Are fixed or variable rate loans cheaper?
Right now, variable rate loans are much lower than fixed rate loans. This is usually the case, but not always. Read more in our guide on the difference between fixed and variable rates.
Find lenders who offer the cheapest deals
To find the cheapest home loan, don't stick with the same bank you've used your whole life. Compare lenders big and small, and you'll quickly find there's a big difference between them.
Do online lenders have the lowest rates?
Online lenders, fintechs and small digital banks tend to have cheaper home loan rates than bigger banks. If you're not comparing rates from these lenders, you might miss some of the best deals on the market.
🔥Hot tip: Mortgage brokers are great at helping you find a home loan and handling mortgage paperwork. But they often don't have small online lenders in their panel of lenders, so you might miss out on a very low rate.
Don't count out the Big Four or your local credit union though
Online lenders are cheap, but it's a myth that the Big Four always have much higher rates. It's a very competitive market. There's often not much difference between a hot online deal and a big bank's lowest variable rate.
Many of the cheapest loans among Finder's partners (and the wider market) are from smaller banks and local credit unions. This is why you really have to compare as many lenders as you can.
Why the cheapest home loan is the one that suits your needs
The cheapest home loan has the lowest interest rate. But every borrower has different needs. So beyond a low rate, you need to get a loan that actually helps you achieve your property goals and financial needs.
Look for a loan that lets you pay it off faster
Variable rate home loans typically let you make extra repayments. By paying more off your loan than the required monthly repayments, you get out of debt faster. This means you pay less interest.
Fixed rate loans are less likely to allow extra repayments.
Find a loan that matches your strategy
Owner-occupier home loans have the cheapest rates. But they're no good if you're a property investor because you need an investment loan. Make sure you compare loans that match your needs as a borrower.
Most borrowers want a principal-and-interest loan, but for some investors, an interest-only loan offers tax benefits.
Look for a loan with an offset account
Some home loans come with 100% offset accounts. This incredibly useful loan feature is essentially a bank account attached to your mortgage. But instead of earning interest, every dollar in the offset account reduces the interest your lender charges.
You still repay the same amount every month, but by putting money in your offset account, you end up finishing the loan faster. This saves you interest.
If I had to credit just one thing with helping me repay my home loan in just 7 years, I'd say it was an offset account. This is a debt-busting secret weapon. You should keep every cent to your name in one of these – we're talking your savings for everything, your emergency cash stash and even your salary. You'll likely save tens of thousands of dollars and shave years off your time in debt.
Nicole Pedersen-McKinnon
Freelance finance journalist
3 extra tips to help you save money on your home loan
1. Choose your loan term carefully
Most borrowers choose 30-year loan terms. This keeps your monthly repayments as low as possible.
With a shorter loan term, of say, 25 years, your monthly repayments will be higher. But because you get out of debt 5 years sooner, it ends up cheaper in the long run because you pay less interest.
Let's break down 3 examples. These loans are all for the same amount borrowed, but the loan term changes:
| Loan term | 30 years | 25 years | 20 years |
|---|---|---|---|
| Interest rate | 5.00% | 5.00% | 5.00% |
| Loan amount | $600,000 | $600,000 | $600,000 |
| Monthly repayment | $3,221 | $3,508 | $3,960 |
| Total cost* | $1,159,535 | $1,052,263 | $950,337 |
*Total cost here refers to the amount of interest you pay over the life of the loan, plus the principal.
As you can see, a longer loan term means cheaper monthly repayments. But a shorter loan means you pay less interest in the long run, making the whole loan cheaper.
2. Find a loan with lower fees
Some lenders charge multiple loan fees that can add up to hundreds of dollars. But other lenders charge basically no fees at all (you still have to pay government fees like a mortgage registration fee).
If 2 loans have identical interest rates and features, the one with fewer fees will be the cheapest home loan.
3. Save a bigger deposit
While it's often easier said than done, saving a bigger deposit means borrowing less money. And that instantly makes your home loan cheaper.
It saves you money in other ways too:
- You can avoid lenders mortgage insurance. If your deposit is 20% of your property's value, then you can avoid the added expense of lenders mortgage insurance (LMI). Borrowers with small deposits usually have to pay this, which can add thousands of dollars to your loan costs.
- You can unlock lower rates. Many lenders reserve their cheapest interest rate offers for borrowers with a deposit of 20% or more.
Watch: How to find a lower home loan rate
Frequently asked questions about getting a cheap home loan
Some of the market's cheapest home loans come in the form of special discount rate offers. These loans offer a cheap rate to entice you in but revert to a higher rate after a year or two.
Let's be clear, there's nothing bad about these deals. A low rate is a low rate. You just need to pay attention to the interest rate once the discount period ends and refinance to a better loan if your new rate jumps up. But every borrower needs to watch their rate, as lenders do move rates up and down (or keep you on your current rate while offering cheaper home loans to new customers!).
Also look at discharge or exit fees. You don't want to get hit with a big fee when trying to exit the loan later (although a small fee isn't so bad if the rate is very competitive).
(Video) What Are The Mortgage Rates Today? | Home Loan Interest Rate Update for 6/3/2023Some lenders offer special loans tailored to first home buyers that are worth checking out. You can use our comprehensive guide to learn more about getting a loan as a first home buyer.
And don't forget about first home buyers' grants offered by many state and territory governments.
Mortgage brokers compare loans for you and are experts at helping borrowers find appropriate products. If you're confused or need help, a broker can be very useful.
But you should also know that many of the market's lowest rates (including many listed on this page) are offered by small lenders that don't appear in a mortgage broker's panel. If the lender isn't in the broker's panel, they cannot help you.
But brokers are helpful for other reasons, and if you have more concerns than just finding the absolute lowest rate, then speaking to a mortgage broker is a good idea. Just do your own research as well.
Saving up for your home loan deposit is a serious challenge for everyone. However, there are ways to trim your expenses, build your deposit and find home loans that don't need large deposits. To master the art of saving for a home loan deposit, you should look at our in-depth, 6-part guide to home loan deposits.
You should always be comfortable with the lender you're planning on going with. If you're not aware of a lender, try calling it to find out about the company and its service level before lodging an application. Speak to previous customers or read customer reviews online.
Keep in mind that little-known lenders might be funded by a larger bank, as is the case with NAB-backed UBank or Firstmac-backed loans.com.au.
(Video) Interest Rate Projection for the rest of 2023 | Mortgage Minute
FAQs
Cheapest home loan interest rates in June 2023 | Finder? ›
Mortgage rates are likely to decrease slightly in 2023, although they're highly unlikely to return to the rock-bottom levels of 2020 and 2021.
Will interest rates go down in June 2023? ›Mortgage rates are likely to decrease slightly in 2023, although they're highly unlikely to return to the rock-bottom levels of 2020 and 2021.
How low will mortgage rates drop in 2023? ›“We expect that 30-year mortgage rates will end 2023 at 5.2%,” the organization noted in its forecast commentary. It since has walked back its forecast slightly but still sees rates dipping below 6%, to 5.6%, by the end of the year.
Will home equity rates go down in 2023? ›As of now, you can expect home equity rates to remain elevated in 2023. If you're making payments on a HELOC, pay especially close attention to rate changes.
Will auto interest rates go down in 2023? ›In December of 2022, the Fed indicated that it expects the funds rate to fall to 4.1% by the end of 2024 after reaching the 5.1% mark by the end of 2023. If that holds true and the federal interest rate begins to fall, auto loan rates should start to drop shortly after.
How high will mortgage interest rates go in 2023? ›“[W]ith the rate of inflation decelerating rates should gently decline over the course of 2023.” Fannie Mae. 30-year fixed rate mortgage will average 6.4% for Q2 2023, according to the May Housing Forecast. National Association of Realtors (NAR).
How high will interest rates go in 2023? ›So far in 2023, the Fed raised rates 0.25 percentage points twice. If they hike rates at the May meeting, it is likely to be another 0.25% jump, meaning interest rates will have increased by 0.75% in 2023, up to 5.25%.
What is the mortgage rate prediction for June 2023? ›In 2022, rates surged past 7 percent far faster than anyone predicted. Then, in 2023, mortgage rates calmed, leading many observers to predict rates would fall all the way to the low 5 percent range this year.
How long will interest rates stay high? ›'I believe by the end of 2023 we will see rates start to fall with a target of between 2.5 to 3 per cent in 2024. 'I believe if the base rate can get back to circa 2.5 per cent, then we will see rates hovering around that mark with a return to products that have not been seen in the mortgage industry for some time.'
Should I lock in my interest rate today? ›Locking in early can help you get what you were budgeting for from the start. As long as you close before your rate lock expires, any increase in rates won't affect you. The ideal time to lock your mortgage rate is when interest rates are at their lowest, but this is hard to predict — even for the experts.
What is the average home equity rate in 2023? ›
Bankrate's forecast for home equity rates
McBride expects that number to reach 8.25 percent by the end of 2023. For fixed-rate home equity loans, the average rate was 7.87 percent for 15-year loans and 7.93 percent for 10-year loans, according to Bankrate's survey.
In May 2023, most home equity loan rates ranged between 7.43% and 9.75%, according to Bankrate.
Will interest rates go down in 2023 or 2024? ›These organizations predict that mortgage rates will decline through the first quarter of 2024. Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point.
What is the interest rate forecast for 2023 and 2024? ›Both estimates are largely in line with fresh projections from officials in March. The Fed penciled in a 5-5.25 percent peak interest rate for 2023, after which officials see rates falling to 4.25-4.5 percent by the end of 2024.
What will interest rates be in 2023 2024? ›| Loan Type | 10-Year Treasury Note High Yield | Fixed Interest Rate |
|---|---|---|
| Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduate Students | 3.448% | 5.50% |
| Direct Unsubsidized Loans for Graduate and Professional Students | 3.448% | 7.05% |
Mortgage Rate Predictions 2023
Mortgage experts see rates decreasing over the coming months as the economy slows. Lawrence Yun, the chief economist of the National Association of Realtors, said he expects rates to fall to 5.5 percent by mid-2023.
The Fed raises interest rates again in what could be its final attack on inflation. Federal Reserve Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, D.C, on March 22, 2023. The Fed raised interest rates again Wednesday but signalled it may be the last hike for a while.
What is the mortgage rate forecast for the next 5 years? ›ING predicts rates to range from 5% in the second quarter of 2023, rising to 5.5% in the third quarter, and then falling back to 5% in the final quarter of the year. They also predict interest rates ranging between 3% and 4.25% in 2024, staying at 3% by the end of 2025.
Will mortgage interest rates eventually go down? ›With U.S. home prices dropping and mortgage rates projected to dip sometime in 2024, homebuyers might be wondering if they should wait until next year to land a more affordable deal.
Will interest rates come back down? ›1) Interest-rate forecast.
We project a year-end 2023 federal-funds rate of 4.75%, falling below 2.00% by mid-2025. That will help drive the 10-year Treasury yield down to 2.25% in 2025 from an average of 3.5% in 2023. We expect the 30-year mortgage rate to fall from an average 6.25% in 2025 to 4% in 2025.
Could interest rates go down soon? ›
The Federal Reserve has been raising interest rates to cool inflation. Because inflation is still higher than where the central bank wants it to be, we may not see a reduction in interest rates anytime soon. However, rates may not climb so much from where they are today.
What day are mortgage rates lowest? ›In general, 25 basis points equates to a 0.125 percentage point change in mortgage rates. This means that, on average, we should expect mortgage rates to move ±1/8 percentage point on Wednesdays and Fridays, and not at all on Mondays. It's no accident that Wednesdays and Fridays are most volatile, either.
How much does 1 point lower your interest rate? ›Each mortgage discount point usually costs one percent of your total loan amount, and lowers the interest rate on your monthly payments by 0.25 percent. For example, if your mortgage is $300,000 and your interest rate is 3.5 percent, one point costs $3,000 and lowers your monthly interest to 3.25 percent.
How much does it cost to lock in a mortgage rate for 6 months? ›Many mortgage lenders do not charge for a mortgage rate lock or rate extension. Among those that do, you're typically looking at 0.25% to 0.50% of the total loan amount for a rate lock (of 60 days or less), and between 0.06% and 0.375% for an extension.
Will interest rates go down again in 2025? ›The predictions made by the various analysts and banks provide insight into what the financial markets anticipate for interest rates over the next few years. Based on recent data, Trading Economics predicts a rise to 5% in 2023 before falling back down to 4.25% in 2024 and 3.25% in 2025.
What is the interest rate today? ›| Loan term | Interest rate | APR |
|---|---|---|
| 30-year fixed | 7.09% | 7.11% |
| 15-year fixed | 6.54% | 6.57% |
| 30-year Jumbo | 7.13% | 7.14% |
| 5/1 ARM | 6.00% | 7.87% |
A rule of thumb says that you'll benefit from refinancing if the new rate is at least 1% lower than the rate you have. More to the point, consider whether the monthly savings is enough to make a positive change in your life, or whether the overall savings over the life of the loan will benefit you substantially.
What is the refinance rate today? ›Today's national 30-year refinance rate trends
For today, Sunday, June 04, 2023, the average interest rate for a 30-year fixed refinance is 7.05%, down 16 basis points over the last seven days.
“Returning to mortgage rates of 3% or 4% is not going to happen, in my view,” says Yun, who points out that historically rates have been higher. The low rates of 2020 and 2021 were “unique” and those that got them were “lucky,” he says.
What will interest rates be in 2023 and 2024? ›The Fed penciled in a 5-5.25 percent peak interest rate for 2023, after which officials see rates falling to 4.25-4.5 percent by the end of 2024.
What bank has the lowest mortgage rates? ›
- Freedom Mortgage: 2.66%
- Bank of America: 2.80%
- Veterans United*: 2.86%
- Better Mortgage: 2.86%
- PennyMac: 2.87%
- AmeriSave: 2.90%
- Navy Federal Credit Union*: 2.93%
- Home Point Financial: 2.94%
- Shop around. When looking for mortgages, be sure to contact several different lenders. ...
- Improve your credit score. ...
- Choose your loan term carefully. ...
- Make a larger down payment. ...
- Buy mortgage points. ...
- Rate locks. ...
- Refinance your mortgage.
The central bank has targeted getting inflation down to 2% by the end of 2024 – it is currently at a “higher than expected” 8.7%. BoE forecasts predict that interest rates will peak at 4.75% at the end of 2023 before falling to around 3.5% by 2025.
How much difference does 1 percent make on a mortgage? ›Mortgage rates increase in increments of 0.125%, and although one percent may seem like an insignificant amount, a quick glance at the numbers would tell you otherwise. As a rough rule of thumb, every 1% increase in your interest rate lowers your purchase price you can afford for the same payment by about 10%.
Can I get a lower interest rate without refinancing? ›There is one way you can get a lower mortgage interest rate without refinancing, however. A mortgage modification allows you to change the original terms of your home loan due to a financial hardship. Your lender may adjust your loan by: Extending your loan term.
Is 4.75 a good mortgage rate? ›Is 4.75% a good interest rate for a mortgage? Currently, yes—4.75% is a good interest rate for a mortgage. While mortgage rates fluctuate so often—which can affect the definition of a good interest rate for a mortgage—4.75% is lower than the current average for both a 15-year fixed loan and a 30-year mortgage.
What is the lowest refinance rate ever? ›Current rates are more than double their all-time low of 2.65% (reached in January 2021). But if we take a step back and look at rates over the long term, they're still below the historic average. Freddie Mac — the main industry source for mortgage rates — has been keeping records since 1971.
What are the lowest refinance rates today? ›| Lender | Rate | APR |
|---|---|---|
| Schools First FCU 5/1 ARM refinance Points: 0 | 5.500% 5/1 ARM refinance | 7.774% |
| Schools First FCU 30 year fixed refinance Points: 0 | 6.625% 30 year fixed refinance | 6.640% |
| Bank of the West 30 year fixed refinance Points: 0 | 7.875% 30 year fixed refinance | 7.888% |