Historical Home Loan Interest Rates Australia
Here is the complete data set of historical interest rates published by the Reserve Bank of Australia.
Historical Home Loan Variable Rates and Inflation Rates
The data set includes historical home loan interest rates (variable interest rates) and quarterly inflation rates back to 1959. I’ve had to adjust the inflation series as the RBA only puts it out quarterly so as an example, if the RBA says the March-2022 quarterly inflation is 5.10%, I make that also apply to April and May-2022.
Rates exceeded 10% for the first time in 1974 and pretty much remained above 10% until 1995.
In just 4 years, interest rates dropped from the high of 17% (January 1990) to the low of 8.75% (June 1994).
After a peak of 10.5% in 1995, interest rates reached a low point of 6.5% in December 1998.
Since then, interest rates have tracked within a band of approximately 8% and 4.5% (with a period of approximately 8 months during which interest rates rose to 9.6% in August 2008).
If you want to read what the last RBA statement was all about, we’ve written a summary here.
Historical Home Loan Variable Rates Compared To Fixed Rates
The data set includes 3 year fixed rates back to 1990. We have plotted this data against historical Australian interest rates for the period.
We consider 3 year interest rates to be relevant because in Australia the average home loan runs for between 3 and 4 years before it is refinanced, paid out or the property/properties the subject of the loan are sold (and so the loan is paid out).
Clearly, you will have been worse off if you selected a 3 year fixed rate loan at any time up until about November 2001. This is because if you fixed a rate until then, the trend was for rates to be reducing and so a fixed rate loan would have missed out on the trend downwards.
If you fixed rates up until 3 years before the peak you would have been fine (the peak was August 2008 so the last date to fix would have been August 2005).
If you fixed at any time between these dates you will have been locked into that interest rate and you would have been likely to miss the period of lower interest rates between about October 2008 and July 2010.
If you fixed interest rates at about July 2007 (7.7%), the variable rates that applied when your loan came out of its fixed rate period would have been about the same (variable rate in July 2010 was about 7.5%).
It is also interesting to compare how often the fixed rate exceeds or is exceeded by the variable rate. Since September 2010, 3 year fixed rates have been less than variable rates. With the recent COVID QE response from the RBA by reducing the 3 years official rate to be the same as the cash rate, fixed rates will be low for some time.
Historical Home Loan Variable Rates, Fixed Rates and Discount Rates
The data set includes the historical discount interest rates back to 2004. Discount rates are the special interest rates that apply to the different packages that the banks offer (for example, there is the ANZ Breakfree package, the Westpac Premier Advantage package and the NAB Choice package). In most cases the annual fees range from $350-$395 which gets you a range of loan features and entitles you to the additional discount which in most cases ranges between 0.9% and 1.65%. The variable rates above will typically be circa 1.0%-1.50% lower than above.
Historical Basic interest rates
We have include the historical basic interest rate history in Australia since Sep-1998 because of the increased popularity. Basic products usually don’t come with an offset account or linked credit cards but they also in many cases come with any ongoing fees. First Home Buyers are increasingly choosing basic products as its fits well with their requirements of low fees. Over a 30 years loan, the difference in fees between a basic product versus the full featured packaged product can total over $11,000.
Note the RBA stopped publishing the basic rates since Feb-2020.