Lowest variable rates drop into the 4s as banks continue to cut home loans
30 July 2025
The lowest fixed and variable home loan rates keep on falling off the back of Wednesday’s Quarterly CPI release and ahead of the RBA’s August 12 policy meeting, with the lowest variable rate now in the 4’s.
Last week, Police Credit Union dropped its lowest variable rate to just 4.99% for owner-occupiers with at least a 20% deposit.
Our tracking shows the last time variable rates started with a ‘4’ was two years ago.
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| Lowest variable rates on Canstar | |
|---|---|
| Lender | Lowest rate from |
| Police Credit Union | 4.99% |
| Horizon Bank | 5.24% |
| Pacific Mortgage Group | 5.34% |
| Homestar Finance, People’s Choice, The Capricornian, Mortgage House, Transport Mutual Credit Union, Freedom Lend, Australian Mutual Bank, RACQ | 5.39% |
Source: Canstar. Excludes eco loans and introductory rate loans. Rates are for owner-occupiers, LVR and other requirements may apply.
Fixed rates continue to drop below 5%
In the past two weeks, 13 lenders have cut at least one fixed home loan rate.
This includes Australia’s fifth largest bank, Macquarie, which sliced its rates by up to 0.20 percentage points late last week.
Greater Bank also cut its fixed home loans last Tuesday (22 July), taking its lowest 2- and 3-year rate down to just 4.94% — the lowest home loan rate in the market.
On Monday, The Mutual cut its fixed rates, matching the lowest 2- and 3-year rates at 4.94%.
As a result, a total of 17 lenders now offer at least one fixed rate under 5%, including from Macquarie, Greater Bank, Bank of Queensland, Heritage Bank and Australian Mutual Bank.
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| Lowest fixed rates on Canstar | ||
|---|---|---|
| Term | Lender | Lowest rate from |
| 1-year | Pacific Mortgage Group | 4.99% |
| 2-year | Greater Bank, The Mutual Bank | 4.94% |
| 3-year | Greater Bank, The Mutual Bank | 4.94% |
| 4-year | Macquarie, People’s Choice, BOQ | 5.29% |
| 5-year | Macquarie, People’s Choice, BOQ, Heritage Bank | 5.29% |
Source: Canstar. Excludes eco loans. Rates are for owner-occupiers, LVR and other requirements may apply.
Lowest variable rate now catching up to fixed
The lowest variable rate is now a fraction above the lowest fixed rates in the market, despite the high possibility of further cash rate cuts from the RBA.
Our research shows the last time the lowest variable rate was below the lowest fixed rate was back in July 2023.
Note: Excludes eco loans. Rates are for owner-occupiers, LVR and other requirements may apply.
Borrowers win from rate cut race
Canstar’s data insights director, Sally Tindall says, “Variable home loan rates starting with a ‘4’ are finally back on the table after a two-year hiatus.”
“Police Credit Union might not be a big name brand, but with this move, it’s dialled up the competition in the variable mortgage market by at least a couple of notches.
“The fact that the lowest variable rate is already below the 5 per cent barrier before an RBA cut, will put pressure on other low-cost lenders to drop rates below this mark.
“Banks are sharpening their pencils to attract new customers. For anyone still sitting on a rate well into the 6’s, it’s a wake‑up call to get on the phone to your bank.
“Fixed rates continue to tumble as banks jostle for pole position, but that doesn’t mean everyone should rush to lock in.
“Banks are dangling sharp fixed rates in front of borrowers chasing short‑term certainty, but with RBA cash rate cuts still on the table, potentially as early as 12 August, fixing could be a gamble.
“If you’re thinking about fixing, make sure you understand the trade‑offs — you might be buying peace of mind, but it could come at a cost if rates fall faster than expected.”
This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
