How low can home loan rates go?

Competition is fierce in Australia’s home loan market, so many lenders are trying to attract new customers by offering rock-bottom rates.

And there are some stunning deals around.

For example, at 1st Street, we have rates from as low as 1.99% on a $600,000 owner-occupied loan (4 years fixed principal and interest) – giving you a monthly repayment of $2,215.

Why are rates so low?

Home loan interest rates are closely tied to the official cash rate, which is set by the Reserve Bank of Australia (RBA) on the first Tuesday of every month (except January).

The RBA slashed the cash rate three times last year, following the onset of the pandemic. It currently sits at a historic low of 0.10% – resulting in today’s ultra-low rate environment.

RBA governor Philip Lowe has gone on the record to say he doesn’t expect to increase the cash rate for “at least three years”.

Could rates go lower?

If the RBA cut the cash rate further, it could plunge into negative territory. When this happens, financial institutions have to pay to store money at the central bank – rather than earn interest on their excess reserves.

In theory, this could lead to a topsy-turvy world in which you would also be charged for saving money in a bank. But on the plus side, you could earn money when taking out a loan.

Denmark, Japan, Sweden and Switzerland have had negative rates before. So could this happen in Australia?

In the words of Dr Lowe, this would be “extraordinarily unlikely” to occur as negative rates come with a cost to the financial system.

So, if you’re considering refinancing your home loan to take advantage of the ultra-low rate environment – now’s the time to do it, because rates are unlikely to get any lower.

Want to save money by refinancing your home loan? Speak with Australia’s most awarded brokers 1st Street to discuss your options. Call 1300 17 87 87, email or fill in this online form.


Our service is completely


Yes, that’s right. You pay zero, zip, nada.

1st Street’s premium service comes at no cost to you! 1st Street is paid by the lender when your loan settles, however, this will not affect your interest rate or loan fees! It is often more cost-effective for a mortgage broker to process a loan rather than the lenders processing it themselves in-house. In fact, we often find that we can save you money by negotiating on your behalf.


Enquire Now

your numbers

Use our online calculators to work out how much you can borrow, loan repayments, stamp duty and lots more.

View calculators

With 40+ lenders to choose from, the options are never ending!