The average interest rate in Australia has been on a bit of a rollercoaster over the past couple of years as the Reserve Bank of Australia has lifted and then dropped interest rates to deal with a combination of high inflation and a sluggish economy.
Here's where things are at currently.
What’s the average mortgage rate in Australia in 2026?
The average mortgage rate in Australia is 5.51% p.a. for owner occupiers with an existing home loan. The average rate is currently lowest on fixed rate loans with a term of three years or less (5.26% p.a.).
Longer-term fixed rates are higher, at 6.11% on average, while existing borrowers with a variable rate are paying 5.52% on average. The average variable rate and overall average home loan rate are more or less the same, reflecting the fact that the vast majority of Australian borrowers are on a variable rate.
The average interest rate on an interest-only home loan is higher at 6.17% p.a., versus 5.48% p.a. on average for principal and interest loans.
Average home loan rates for existing customers (owner occupier)
Average home loan rates for new customers (owner occupier)
Borrowers taking out a new loan, whether first-home buyers or refinancers/upgraders, generally get a lower interest rate versus what existing customers are paying.
The average rate on new owner occupier loans is 5.48% p.a. which is 0.03 percentage points lower than the average for existing borrowers. That’s because lenders often offer better deals to attract new customers.
However, rates are actually higher for new borrowers on longer-term fixed loans (above three years), reflecting the fact that lenders have more recently been increasing their interest rates on fixed-rate home loans.
Rates are also higher for new borrowers with higher-risk loans, either with a loan-to-value ratio of 81% or above or a higher loan amount.
What’s the average mortgage rate on investor loans?
The average rate on an existing investor home loan in Australia is 5.75% p.a., which is a good chunk higher than the equivalent rate on owner occupier loans. The gap is most noticeable on longer fixed-term loans where investors pay a particularly high premium over owner occupiers on average (+0.7 percentage points).
On shorter-term fixed loans, investors loans rates are similar to those being paid by owner occupiers with an existing loan.
The average interest rate on an interest-only investor loan is closer to the average on principal and interest loans, compared to the equivalent gap on owner occupier loans. That’s because interest-only loans are generally more common on investor loans, with lenders offering more IO options to investors which keeps rates comparatively lower.
Average mortgage rates for existing investor loans
Average mortgage rates for new investor loans
As with owner occupier loans, investors taking out a new home loan enjoy lower rates than existing borrowers. In fact, the difference is more pronounced on investor loans, with the average rate for new borrowers being 0.09 percentage points lower than it is on existing loans.
The other average rate trends are similar, with investors taking out a new short-term fixed rate now paying more than those already currently on a shorter fixed term.
The risk approach of lenders on investors loans is consistent when it comes to LVR with what we can see in owner occupier lending too. The average rate on a high-LVR investor loan (81% or above) is higher than it is on lower-LVR loans. However, higher-value investor loans actually attract lower rates on average compared to lower-value loans.
Average interest rates versus the lowest rates available
As you would expect, the average home loan in Australia is significantly higher than the lowest rates available. That’s simply how averages work. But it does highlight the savings that are available to borrowers who are paying around the average, or higher.
Take, for example, the average variable interest rate for existing owner occupier loans of 5.52% p.a. and compare it to the lowest variable rate for new borrowers of 5.08% p.a. (comparison rate 5.13%). Switching from the average to the lowest rate would save a borrower with a $500,000 loan (25 years remaining) around $130 per month.
If that borrower were able to maintain that saving over the life of their loan they would end up almost $40,000 better off due to the interest savings.
It is important to remember that the average mortgage interest rate includes all loans and variations including those designed for higher risk borrowers. The lowest home loan rates are generally available to low-risk borrowers only.
Average mortgage rates over time
Average home loan rates in Australia are currently still significantly lower than they have been for much of the past 60 years. That’s despite interest rates having increased over the past few years versus their all-time lows of March 2020 - April 2022 (the ‘COVID years’).
The average mortgage rate in Australia hit its peak of 17.00% in 1989 and early 1990 when the country was experiencing high inflation and financial deregulation which caused a spike in loans being issued by banks.
Since then, interest rates have fallen dramatically, but this has coincided with much higher dwelling prices, meaning an average borrower today still has higher borrowing costs relative to their income, compared to a borrower paying a higher rate but on a much lower loan amount.