Are you worried that your mortgage rate is not competitive? Maybe it’s time to change

Yes, the RBA has raised the cash rate by 0.25% and banks are already responding by passing on the higher rates to variable mortgages.

So now might be the best time to review your current mortgage interest rate to make sure you’re getting a competitive rate. But before you think about switching, there are a few things to consider:

  • Additional fees and costs that may accompany the refinancing of home loans
  • Make sure a change gets you a better deal.

Below, we’ve created a scenario where a couple compares their current home loan from a large bank to a smaller lender.

Big bank vs small lender

Jacob and Thomas bought a house in a suburb near a big city for $800,000. After paying with a 20% down payment, the couple secured a variable home loan from CommBank at 4.80% per annum for 25 years.


Cost of the house (minus deposit) $640,000
Floating interest rate 4.80% per year
Monthly repayment $3,677
Total interest payable $460,154

*This total does not include consulting fees, bills or home insurance costs.

Jacob and Thomas’ monthly mortgage payment is $3,677. That’s about $44,124 per year.

After a while, the couple felt that the rate they had was not competitive enough, especially when more rate hikes were looming. So they decided to see how much they could save by opting for an online lender instead.

If they were to switch to a smaller lender like Athena, they could get a variable interest rate of 2.24% per annum, which is 255 basis points (or 2.55%) less than CommBank’s rate.


Cost of the house (minus deposit) $640,000
Floating interest rate 2.24% per year
Monthly repayment $2,788*
Total interest payable $196,420

*This total does not include consulting fees, bills or home insurance costs.

By switching to Athena, Jacob and Thomas were able to cut their monthly repayments by $889 and pay around $33,456 a year. Plus, the total interest payable is reduced by $263,734, which means they can pay off their house faster.

The average variable interest rate is 3.02%, which means that if the couple gets this rate of 2.24%, it is 78 basis points below the average.

But what if they can’t get the low rate of 2.24%? What if they got closer to the average?

Average mortgage interest rate

Cost of the house (minus deposit) $640,000
Floating interest rate 3.02% per year
Monthly repayment $3,042*
Total interest payable $272,484

*This total does not include consulting fees, bills or home insurance costs.

By finding a rate closer to the average, Jacob and Thomas could potentially save $635 on their monthly repayments. Paying around $36,504 per year versus $44,124 per year with their current rate with CommBank. Even the average rate offers them a better result!

After some thought, the couple decided to make the switch and put the money saved in a term deposit with a high interest rate.

One of the main features of moving your loan from one lender to another is finding a better deal to save money in the long run. This is why thousands of Australians refinance their home loans.

A Australian Bureau of Statistics report found that Australians fund around $14 billion a month!

To get started, you need to research, research, research!

You want to make sure you get the best possible deal with a home loan that meets all your needs. It is also important to see what the requirements of each lender are. Some require you to have a certain amount of equity before you can switch or get lower rates. The more equity you have, the more likely you are to get a cheaper mortgage.

If you’re still unsure how to refinance your home loan, don’t worry, we have plenty of guides available to help you. You can also check out our home loan rate change calculator to see how changing your interest rate can lower your monthly repayments. If you’re like Jacob and Thomas and looking to upgrade to a more competitive home loan interest rate, you can start comparing below or check out our comparison chart.

ATTENTION: This comparison rate only applies to the example or examples given. Different amounts and durations will result in different comparison rates. Costs such as withdrawal charges or prepayment charges, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed corresponds to a guaranteed loan with monthly principal and interest repayments of $150,000 over 25 years.

Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on the amount of your loan, the term of the loan and your credit history. Actual repayments will depend on your personal circumstances and changes in interest rates.

^ See Mozo Experts Choice Home Loan Awards information

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