2026 Australia Mortgage Guide — Home Loan Rates & Repayment Calculator
Published: 2026-03-26
The Reserve Bank of Australia (RBA) raised the cash rate to 4.10% on 18 March 2026, pushing variable home loan rates higher across all major lenders. With the average variable rate now around 6.45%, understanding your mortgage options has never been more important. This guide covers everything Australian homebuyers and existing borrowers need to know in 2026.
1. RBA Cash Rate & Home Loan Rates (March 2026)
| Rate Type | Current Rate | Notes |
|---|---|---|
| RBA Cash Rate | 4.10% | Increased 25 bps on 18 March 2026 |
| Average Variable Rate | ~6.45% | Big 4 banks passing on full 25 bps |
| Lowest Variable Rate | ~5.10% | Select lenders, owner-occupier, P&I |
| Best 2-Year Fixed | ~5.50% | Competitive fixed offers available |
| Best 5-Year Fixed | ~5.70% | Lock in rate certainty |
2. Variable vs Fixed Rate Loans
| Feature | Variable | Fixed |
|---|---|---|
| Rate moves with | RBA cash rate | Locked for term (1–5 years) |
| Extra repayments | Unlimited | Usually limited to $10K–$20K/year |
| Offset account | Usually available | Rarely available |
| Redraw facility | Yes | Limited or none |
| Break costs | None | Can be very expensive |
| Best for | Flexibility, falling rates | Certainty, rising rate environment |
Many borrowers choose a split loan: fixing a portion (e.g., 60%) for rate certainty while keeping the rest variable for flexibility and offset benefits.
3. Principal & Interest vs Interest-Only
With a P&I (Principal and Interest) loan, each payment reduces both the interest and the loan balance. With an interest-only loan, you only pay the interest for a set period (usually 1–5 years), then revert to P&I with higher payments.
$500,000 loan at 6.45%, 30-year term:
P&I monthly: $3,140
Interest-only monthly: $2,688 (saves $452/month initially)
But: After 5 years IO, remaining 25 years at P&I: $3,531/month
Total interest (P&I): $630,400 vs Total interest (5yr IO then P&I): $710,800
4. LVR and Lenders Mortgage Insurance (LMI)
The Loan-to-Value Ratio (LVR) is the percentage of the property value you are borrowing. If your LVR exceeds 80% (i.e., your deposit is less than 20%), you will generally need to pay Lenders Mortgage Insurance (LMI):
| LVR | Deposit | LMI Required? |
|---|---|---|
| 60% or less | 40%+ | No — best rates available |
| 61–80% | 20–39% | No |
| 81–90% | 10–19% | Yes — typically $5K–$15K |
| 91–95% | 5–9% | Yes — typically $15K–$35K |
5. First Home Buyer Schemes
- First Home Guarantee (expanded Oct 2025): All eligible first home buyers can get a home loan with as little as 5% deposit without paying LMI. The government guarantees up to 15% of the property value.
- First Home Owner Grant (FHOG): A one-off grant (amount varies by state, typically $10,000–$30,000) for purchasing or building a new home under a price cap.
- Stamp duty concessions: Most states offer reduced or waived stamp duty for first home buyers under certain property value thresholds.
- First Home Super Saver Scheme (FHSSS): Withdraw voluntary super contributions (up to $50,000) for your first home deposit at concessional tax rates.
Calculate your Australian mortgage repayments
Enter your loan amount, interest rate, and term to see monthly repayments for P&I and interest-only options.
Australian Mortgage Calculator →6. Stamp Duty by State
Stamp duty (or transfer duty) varies significantly between Australian states and territories. Here are approximate stamp duty amounts for a $700,000 property:
| State/Territory | Stamp Duty ($700K) | First Home Buyer Concession |
|---|---|---|
| NSW | ~$26,000 | Choice: pay upfront or annual land tax |
| VIC | ~$37,000 | Exempt under $600K, concession $600K–$750K |
| QLD | ~$18,000 | Concession under $700K |
| WA | ~$26,000 | Exempt under $430K |
| SA | ~$31,000 | Exempt under $650K for new homes |
| ACT | ~$22,000 | Concession available |
7. Typical Repayment Examples
Monthly P&I repayments at the average variable rate of 6.45%, 30-year loan term:
| Loan Amount | Monthly Repayment | Total Interest (30 years) |
|---|---|---|
| $400,000 | $2,512 | $504,320 |
| $500,000 | $3,140 | $630,400 |
| $600,000 | $3,768 | $756,480 |
| $800,000 | $5,024 | $1,008,640 |
Use our mortgage calculator to model different loan amounts, rates, and repayment terms for your specific situation.
Calculate your Australian home loan repayments:
Australian Mortgage Calculator →Sources: Reserve Bank of Australia (RBA), Australian Prudential Regulation Authority (APRA), state revenue offices, Australian Government First Home Guarantee scheme.
Frequently Asked Questions
What is the RBA cash rate in March 2026?
The RBA increased the cash rate to 4.10% on 18 March 2026, up 25 basis points from 3.85%. The increase was driven by renewed inflation pressures. All major banks have passed on the full 25 bps increase to variable home loan rates.
What is LMI and how can I avoid it?
Lenders Mortgage Insurance (LMI) is charged when your deposit is less than 20% of the property value (LVR above 80%). You can avoid it by saving a 20% deposit, using the First Home Guarantee (5% deposit with no LMI for eligible first home buyers), or having a family member act as guarantor.
Should I choose a fixed or variable home loan in 2026?
With the RBA raising rates in March 2026, fixed rates may offer certainty if you believe rates will continue to rise. Variable rates provide more flexibility with features like offset accounts and unlimited extra repayments. Many borrowers choose a split loan to get the benefits of both.