The gap
The 51 basis point gap in Australian home loan rates
What the average outstanding owner-occupier rate and the lowest advertised variable rate each measure, where the gap between them comes from, and how to read it.
By Ratey. Published .
The figures
Two published figures, a month apart
The Reserve Bank puts the average rate on outstanding owner-occupier home loans at 6.20% p.a. for May 2026.1 Canstar's comparison table lists a lowest advertised variable rate of 5.69% p.a. for an owner-occupier paying principal and interest, in the table dated 2 July 2026.2 The distance between the two is 51 basis points.
They are different kinds of number, which is what makes the distance worth reading. The first is the back book: every owner-occupier loan still running in the country, averaged, including every loan nobody has looked at in years. The second is the shopfront: the sharpest price any lender chose to advertise on the day the table was compiled. One measures where borrowers actually sit. The other measures where lenders compete.
Two cautions before reading anything into the gap. The figures are dated about a month apart, so it is indicative rather than exact. And the lowest advertised rate is not a rate every borrower can get: eligibility depends on your loan to value ratio, credit history, loan size and product features.
1 Reserve Bank of Australia, Statistical Table F6, data to 31 May 2026, retrieved 26 July 2026.
2 Canstar, Home Loan Comparison, lowest variable rates table dated 2 July 2026, retrieved 26 July 2026.
The mechanism
Where a gap like this comes from
No lender charges the back book average on purpose. The average drifts up because written loans sit still while advertised prices keep moving to win new business. A loan priced sharply a few years ago and untouched since can sit above today's shopfront without a single decision being made about it. That drift has a name, the mortgage loyalty tax, and it grows with the age of the loan.
An average is also not a target. Some of the back book is fixed loans written when fixed pricing was lower than anything advertised today, and some of it is loans priced for situations no comparison table lists. The gap describes the spread of the market. It is not a promise about any particular loan, including yours.
Reading it
How to read the gap for your own loan
Your own position is arithmetic, not opinion. The rate you are paying is on your most recent statement or in your banking app. Where it sits against the two published figures above is a comparison you can make in under a minute, and comparing home loan rates properly, product features and all, takes only a little longer.
Both figures expire. The RBA figure describes May 2026, the advertised table is dated 2 July 2026, and each will be superseded without ceremony. The gap quoted here is the gap on the review date stamped below, not a standing fact. A home loan review is the habit of putting your own numbers next to the published ones while both are still current.
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Sources
Where these figures come from
Market figures are point in time published figures, checked each time this page is reviewed.
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