Mortgage-payers of Australia got a long-awaited breather today, when the board of the Reserve Bank of Australia (RBA) left the cash rate unchanged at 4.35%.
The pause follows three consecutive hikes in February, March, and May 2026, brought against a backdrop of high inflation and economic uncertainty due to the Middle East crisis.
The RBA might be standing still, but that’s no reason for you to do the same. If you’ve been complacent with your home loan, you could be paying a 'loyalty tax'.
Are you paying a home loan loyalty tax?
If you’ve been diligently paying your mortgage for a while but haven’t taken the time to compare what’s out there on the market, you might be paying a home loan loyalty tax–and potentially a hefty one.
Compare Home Loan RatesA new Canstar survey of 2,891 homeowners found that more than half (52%) have never changed home loan providers, while a further 31% haven’t switched in the last two years.
Canstar’s Director of Data Insights Sally Tindall says “those who haven’t negotiated in years are likely overpaying” when it comes to their home loan.
“Borrowers often assume loyalty will be rewarded, but in the mortgage market that’s rarely the case,” she added, saying you could uncover a “substantial” saving by comparing.
Think of it this way: an owner occupier who took out a loan five years ago and hasn’t refinanced since is likely to be on a variable rate of 6.98%.
Assuming you have a mortgage balance of $600,000 and 25 years remaining on your loan, refinancing to a home loan rate of less than 6% could save you more than $10,700 over the next two years, even after factoring in $1,150 in switch costs.
In other words, loyalty to your home loan provider could end up costing you over $10,000.
What are the lowest variable mortgage rates on Canstar’s database?
If you’re considering your options, or you’re just curious about how home loan rates are looking right now, here are the lowest variable rates on Canstar’s database at the time of writing:
Lender | Rates from |
|---|---|
LCU | 5.69% |
Horizon Bank, Pacific Mortgage Group | 5.74% |
Unity Bank | 5.80% |
Virgin Money, Police Bank | 5.84% |
Freedom Lend, Gateway Bank, Mortgage House, Police Credit Union, RACQ, Transport Mutual, Unloan | 5.89% |
Source: Canstar. Rates based on owner occupier loans. LVR and other requirements apply. Excludes green loans.
What does today’s decision mean for savings account rates?
While potentially disappointing for struggling mortgage borrowers, higher rates for longer could herald larger returns for those keeping excess funds in savings accounts or term deposits.
Canstar data shows savings account interest rates are currently sitting at 14-year highs, with market leaders offering returns of 5.75% p.a.
Have interest rates finally peaked?
Today’s hold could signal that rate hikes have finally come to an end, with economists at the nation’s big four banks largely agreeing the RBA’s next move will be a cut.
But home loan holders shouldn’t count on relief for a while yet. CBA is predicting a 25 basis point cut in May 2027, while NAB believes we’ll see easing in June next year, and ANZ predicts a cut will come in a year from September.
Westpac is the only holdout among the big four banks, predicting two more 2026 rate rises–a 25 basis point hike in August and another in September.
