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New lowest variable rate, but September RBA cut off the cards as CPI lifts
Competition in the variable mortgage space continues to push rates lower, despite a rise in inflation.
28 Aug 2025
Competition in the variable mortgage space continues to push rates lower, despite a rise in inflation.
Easy Street has today taken the title of the lowest variable rate lender in the market, with an owner–occupier loan at 4.89% (comparison rate 4.94%). However, this offer is only open for applications until 10 October and must be funded by 10 December.
Since the August cash rate cut, 88 lenders have announced variable rate cuts, with the vast majority passing on the full 0.25 percentage points, according to our rate tracker.
Rate tracking analysis shows:
- 4.89% is the new current lowest variable rate.
- Almost 30 lenders now offer at least one variable rate under 5.25%.
- 5.54% will be the estimated average variable owner-occupier rate for existing borrowers.
- 5.80% will be the estimated average variable investor rate for existing borrowers.
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| Lowest variable rates on Canstar | ||
|---|---|---|
| Advertised rate from | Min deposit required | |
| Easy Street | 4.89% | 20% |
| Horizon Bank | 4.99% | 30%, FHB only |
| Police Bank | 5.09% | 2%, FHB only |
| Pacific Mortgage Group | 5.14% | 20% |
| RACQ | 5.14% | 40% |
Source: Canstar.com.au. Note: based on advertised variable rates for owner-occupiers paying principal and interest. LVR requirements apply. Excludes green loans.
Inflation spikes for the first time in seven months
Headline inflation has lifted to an annual rate of 2.8% in July, up from 1.9% in the previous month, the first rise in the monthly dataset since December 2024.
One of the key drivers was the sharp rise in electricity, up 13.1% for the year. This was partly the result of the July electricity price hikes, plus the delay in the next round of the federal government electricity rebate, which, for households in NSW and the ACT, were not applied in July but August.
The monthly dataset also recorded a rise in holiday travel and accommodation (+3.3% annually), reflecting the increase in demand and higher prices during the July school holidays.
Trimmed mean inflation lifted to an annual rate of 2.7% in July, up from 2.1% in June.
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| Monthly CPI Indicator – annual movement | ||
|---|---|---|
| Month | CPI indicator | Annual trimmed mean |
| November 2024 | 2.3% | 3.2% |
| December 2024 | 2.5% | 2.7% |
| January 2025 | 2.5% | 2.8% |
| February 2025 | 2.4% | 2.7% |
| March 2025 | 2.4% | 2.7% |
| April 2025 | 2.4% | 2.8% |
| May 2025 | 2.1% | 2.4% |
| June 2025 | 1.9% | 2.1% |
| July 2025 | 2.8% | 2.7% |
Source: ABS Monthly Consumer Price Index Indicator.
What does this mean for the next RBA meeting?
A cash rate cut at the end of the RBA’s next meeting on 30 September is highly unlikely.
The RBA Board minutes from the August meeting, released yesterday, confirmed that further easing is likely. However, the Board’s preference is for a gradual lowering of the cash rate.
While the RBA puts little weight on the monthly inflation indicator, this result today will put even less pressure on the bank to consider a cash rate cut at the next meeting in September, particularly as the latest round of employment figures were no cause for concern.
Knowing the Board’s strong preference for quarterly inflation data, it will likely wait until the 3-4 November meeting before cutting the cash rate again, provided the September quarterly CPI results, due out on 29 October, remain on track.
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| Current big four bank cash rate forecasts | |||
|---|---|---|---|
| Bank | Next cut | Total no. cuts to come | Cash rate at end of cuts |
| CBA | 4 November | 1 | 3.35% |
| Westpac | 4 November | 3 | 2.85% |
| NAB | 4 November | 2 | 3.10% |
| ANZ | 4 November | 1 | 3.35% |
Lending market still hot, as new lowest variable rate hits 4.89%
Canstar’s data insights director, Sally Tindall says, “The monthly CPI indicator has seen a sizable hike in July, lifting to 2.8 per cent – the first rise in seven months.”
“Much of the increase can be explained on the back of the July electricity price hikes, a delay in the federal government rebate for households in NSW and the ACT and an expected increase in holiday travel. While the RBA is not likely to panic at this print, all eyes will be on the next couple of rounds of data to see if there’s more to it.
“The possibility of a September cash rate cut was a long shot at best, however, this round of monthly data squashes pretty much all hope of back-to-back moves.
“The Board has confirmed, at least one more cash rate cut is likely, however, it will want to see the next round of quarterly CPI results before pulling the trigger again. This also gives the RBA two more rounds of employment data to work from.
“The bottom line for borrowers is, if you’re hoping for another rate cut next month, you might have to take action yourself.
“Despite inflation nudging up, lenders are still competing for new home loan customers, with the new lowest variable rate in our database dropping to an ultra-competitive 4.89 per cent.
“It’s not the only lender putting competitive rates on the table. The Canstar database shows almost 30 lenders currently offer at least one variable rate under 5.25 per cent for owner-occupiers paying principal and interest.”
This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.
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