Interest Rates Overview

Across the full 2025 calendar year, Australian personal finance interest rates showed a broadly easing trend - but the pace and direction varied significantly by product. The dominant theme was that new lending rates fell faster than outstanding stock rates, reflecting the lag between market pricing and the existing loan book.

Credit card rates proved the most stubborn, averaging 18.67% across 12 monthly observations and moving in a narrow band of just 0.28 percentage points (18.52%–18.80%). Rates peaked in May at 18.80% and hit their low in November at 18.52%, ending the year at 18.58% - only 0.13 percentage points below where they started in January.

At the other end of the spectrum, new fixed-term loan rates showed the most improvement, falling 1.22 percentage points from 10.14% in January to 8.92% in December. This is the clearest signal that lenders began competing more aggressively for new business as the rate cycle turned.

What Were Australian Personal Loan Interest Rates in 2025?

The average interest rate on an Australian credit card was 18.67% across 2025, only marginally higher than the 18.40% average recorded in 2024, an increase of 0.27 percentage points. Personal lending rates in 2025 ranged widely by product, from just 5.82% on new residentially secured loans up to 18.67% on credit cards, despite the Reserve Bank cutting the official cash rate by 0.75 percentage points over the year, from 4.35% to 3.60%. The credit card average also sat 9.99 percentage points above the outstanding fixed-term total of 8.68%.

Credit Card Rates Remain Largely Static

The credit card outstanding rate opened 2025 at 18.71% in January and closed the year at 18.58% in December, a movement of just 0.13 percentage points, despite the cash rate falling 0.75 percentage points over the same period. Credit card pricing behaves more like a broad, largely fixed risk-based rate than a rate that tracks the cash rate closely, which is why it is often treated as a basic risk pricing metric rather than a genuine market rate that responds to monetary policy. Within new fixed-term lending, the fixed rate option averaged 10.36% against 8.17% for the variable rate option, a 2.19 percentage point gap.

Source: RBA Statistical Table F8, Personal Lending Rates, January to December 2025.

Personal Loan Rates

The personal loan market showed a clear easing trend across 2025. Outstanding fixed-term personal loan rates averaged 8.68% for the year, starting at 8.88% in January and falling steadily to 8.52% by December - a decline of 0.36 percentage points. The January peak of 8.88% marked the cycle high for this series.

Within the outstanding stock, fixed-rate and variable-rate loans moved in opposite directions. Fixed-rate outstanding loans edged up slightly - from 9.91% in January to 10.04% in December - averaging 10.06% for the year. Variable-rate outstanding loans fell more substantially, from 7.82% in January to 7.10% in December, averaging 7.35% for the year.

The biggest improvement was in new fixed-term lending, where rates fell 1.22 percentage points across the year - from 10.14% in January to 8.92% in December. This was the largest rate reduction of any personal finance category in 2025, averaging 9.32% for the full year. The January rate of 10.14% was the peak for this series.

Residentially secured loans continued to offer the cheapest personal finance rates. Outstanding residentially secured rates averaged 5.95% for the year, falling from 6.43% in January to 5.67% in December. New residentially secured loans averaged 5.82%, also falling from 6.28% to 5.55%. For borrowers with home equity, the cost advantage over unsecured borrowing remains substantial - roughly 300 basis points below unsecured variable rates.

How Did New Personal Loan Rates Compare to Outstanding Loan Rates in 2025?

New fixed-term personal loan rates fell by 1.22 percentage points in 2025, from 10.14% in January to 8.92% in December, a larger decline than the Reserve Bank's 0.75 percentage point cut to the cash rate over the same period. Outstanding fixed-term loan rates fell by a smaller 0.36 percentage points over the year, highlighting how differently these two measures respond to the same rate environment.

What Is the Difference Between New and Outstanding Loan Rates?

Outstanding loan rates reflect the average rate charged across every loan currently on a lender's books, including loans written months or years earlier under different pricing conditions. New loan rates reflect what a borrower is offered when applying today. Because these are two different populations of loans, one an accumulated back book and the other a live, current-day price, they can move at different speeds and even diverge in direction within the same period, and neither measure alone tells the full story of what is happening to borrowing costs. Within the outstanding fixed-term book itself, the fixed rate component rose 0.13 percentage points over the year while the variable rate component fell 0.72 percentage points, moving in opposite directions.

Source: RBA Statistical Table F8, Personal Lending Rates, January to December 2025.

New Rates Fell Faster Than Outstanding Rates in 2025

The 1.22 percentage point fall in new fixed-term loan rates over 2025 outpaced both the 0.75 percentage point cut to the cash rate and the 0.36 percentage point fall in outstanding fixed-term rates. New loan rates are more directly and immediately responsive to a change in the cash rate, since lenders reprice new offers quickly to stay competitive, while outstanding books only shift as existing loans mature, are refinanced, or are replaced by newly written loans at current rates. By December, the new fixed-term total of 8.92% had moved 0.40 percentage points above the outstanding fixed-term total of 8.52%.

Source: RBA Statistical Table F8, Personal Lending Rates, January to December 2025.

How Do Residentially Secured Personal Loan Rates Compare to Unsecured Rates in Australia?

Australians taking out a new residentially secured personal loan paid an average of 5.82% in 2025, compared with 10.36% for a new unsecured fixed rate loan, a difference of 4.54 percentage points. This is the widest gap between any two comparable loan types in the 2025 rate data. This compares with a smaller 0.13 percentage point gap between the new and outstanding residentially secured rates themselves, at 5.82% and 5.95% respectively.

The Secured Lending Discount on New and Outstanding Loans

The gap is narrower, though still substantial, for outstanding loans: the outstanding residentially secured rate averaged 5.95% in 2025, against 8.68% for the outstanding fixed-term total, a difference of 2.73 percentage points. On a relative basis, the outstanding residentially secured rate sits 31.5% below the outstanding fixed-term total.

Source: RBA Statistical Table F8, Personal Lending Rates, January to December 2025.

Why the Gap Differs Between New and Outstanding Loans

The wider gap on new loans, at 4.54 percentage points, compares with a 2.73 percentage point gap on outstanding loans. Outstanding unsecured lending includes older loans written under past pricing conditions that have not yet rolled off the book, while new-loan rates reflect the pricing decisions lenders are making right now on both secured and unsecured products. The new residentially secured rate of 5.82% also sat 2.35 percentage points below the new fixed-term variable rate of 8.17%. The new unsecured fixed rate of 10.36% also sat 1.68 percentage points above the outstanding fixed-term total of 8.68%.

Source: RBA Statistical Table F8, Personal Lending Rates, January to December 2025.

What Are Finance Lease, Margin Lending and Other Credit Rates in Australia?

Finance lease rates moved in opposite directions in 2025: the outstanding rate rose 0.59 percentage points, from 8.30% in January to 8.89% in December, while the new finance lease rate fell 0.61 percentage points over the same period, from 9.34% to 8.73%, a combined divergence of 1.20 percentage points between the two measures. The new finance lease rate of 8.73% in December sat 0.16 percentage points below the outstanding finance lease rate of 8.89% recorded in the same month.

Why Finance Lease Outstanding Rates Rose While New Rates Fell

Finance leases typically run for three to five years, and many leases still on lenders' books in 2025 were originally written between 2020 and 2022, when interest rates were very low. As those older, lower-rate leases mature and fall off the book, the leases that remain skew increasingly toward more recently written, higher-rate agreements, which pushes the outstanding average up even as the rate offered on brand new leases falls in line with the broader rate environment.

Source: RBA Statistical Table F8, Personal Lending Rates, January to December 2025.

Margin Lending and Other Revolving Credit Rates

Margin lending rates averaged 7.14% across 2025, falling from 7.64% in January to 6.79% in December, a decline of 0.85 percentage points, and touched a low of 6.74% in October before edging slightly higher by year's end. Other revolving credit, a category covering products such as personal overdrafts and unsecured lines of credit, averaged 7.43% across the year and fell 1.17 percentage points, from 8.07% in January to 6.90% in December, broadly tracking the pace of decline seen in new fixed-term lending rates. Both products moved in a similar direction and at a similar pace to new lending rates over 2025, unlike the finance lease and credit card categories, which each showed a more distinctive pattern of their own. Margin lending sat 0.29 percentage points below other revolving credit on average across the year.

Source: RBA Statistical Table F8, Personal Lending Rates, January to December 2025.

How Much Did Australians Borrow in Personal Loans in 2025?

Australians took out $36.42 billion in personal fixed-term loans in 2025, excluding refinancing, up 13.9% from $31.98 billion in 2024. Borrowing grew steadily through the year, from $8.21 billion in the March quarter to $9.71 billion in the December quarter, an increase of $1.50 billion between the first and last quarters of 2025. This represents an 18.3% increase in quarterly lending between the March and December quarters alone.

Vehicle and Other-Purpose Lending in 2025

Vehicle loans accounted for $19.30 billion of the 2025 total, or 53.0% of personal lending excluding refinancing, while loans for other purposes accounted for $17.12 billion, or 47.0%. In 2024, the split was wider, at 55.8% vehicles against 44.2% other purposes, meaning the two categories moved closer together in size over the course of 2025. Vehicle lending and other-purpose lending together made up the full $36.42 billion total, excluding refinancing.

Source: ABS Lending Indicators, Table 27, Personal Finance Fixed Term Loans by Purpose, 2025.

How 2025 Personal Loan Growth Compares to 2024

The 13.9% increase in total personal loan volumes was not evenly split across purpose: vehicle lending rose 8.3% year on year, from $17.83 billion to $19.30 billion, while lending for other purposes rose 21.0%, from $14.15 billion to $17.12 billion. Growth in personal lending in 2025 was driven substantially more by non-vehicle borrowing than by vehicle finance, more than two and a half times the rate of growth in the vehicle category. Both categories still recorded solid growth in dollar terms, with vehicle lending adding $1.48 billion and other-purpose lending adding $2.97 billion over the year.

Source: ABS Lending Indicators, Table 27, Personal Finance Fixed Term Loans by Purpose, 2025.

What Are Australians Using Personal Loans For in 2025?

For the first time since June 2011, spending on personal loans for purposes other than vehicles exceeded vehicle lending in a single quarter, with $4.96 billion in other-purpose lending against $4.74 billion in vehicle lending in the December 2025 quarter, a gap of $218 million.

What Else Do People Use Personal Loans For Outside of Buying a Car?

The other purposes category covers personal loans used for anything beyond buying a vehicle, including debt consolidation, home renovations, travel, medical costs, and day-to-day expenses. This is a broad, catch-all classification that has grown to represent nearly half of all personal loan lending excluding refinancing, at 47.0% of the full 2025 total, up from 44.2% in 2024. The 47.0% share for other purposes in 2025 sat 6.0 percentage points behind the 53.0% share for vehicles.

Source: ABS Lending Indicators, Table 27, Personal Finance Fixed Term Loans by Purpose, 2025.

There Is an Expanding Use Case for Personal Loans

Vehicle loans still grew in 2025, up 8.3% year on year to $19.30 billion, so the December quarter milestone reflects personal loans being used for an expanding range of purposes rather than any pull-back in vehicle finance. Other-purpose lending simply grew faster, up 21.0% over the same period, more than double the rate of vehicle loan growth, which is what allowed it to close the gap with vehicle lending and briefly overtake it in the December quarter. The trend across all four quarters of 2025 shows the gap between the two categories narrowing steadily, from a 13.8 percentage point split in the March quarter down to vehicles trailing other purposes by the December quarter. Other-purpose lending's 21.0% growth rate was 12.7 percentage points higher than the 8.3% recorded for vehicle lending.

Source: ABS Lending Indicators, Table 27, Personal Finance Fixed Term Loans by Purpose, 2025.

How Much Personal Loan Refinancing Happened in Australia in 2025?

Australians refinanced $4.16 billion in personal loans internally, meaning with their existing lender, and $2.67 billion externally, meaning by switching to a new lender, in 2025, a combined $6.83 billion. Internal refinancing grew 13.9% year on year, while external refinancing grew faster still, up 17.9% from 2024. External refinancing grew 4.0 percentage points faster than internal refinancing over the year, at 17.9% against 13.9%.

Internal Refinancing Still Dominates in Personal Loans

Internal refinancing accounted for 60.9% of all personal loan refinancing in 2025, down only slightly from 61.7% in 2024. This split has stayed broadly stable year on year, even though external refinancing grew at a faster percentage rate over the year. In dollar terms, internal refinancing of $4.16 billion was 1.55 times the size of external refinancing at $2.67 billion.

Source: ABS Lending Indicators, Table 27, Personal Finance Fixed Term Loans by Purpose, 2025.

Refinancing Activity Picked Up in the Final Quarter of 2025

Both external and internal refinancing picked up in the December 2025 quarter, reaching $778 million and $1.14 billion respectively, the highest quarterly figures for either category recorded in 2025. This pickup aligns with the Reserve Bank's cash rate reduction in the same period, consistent with borrowers moving to refinance existing personal loans once rates began to fall. Combined refinancing of $1.92 billion in the December quarter alone accounted for 28.1% of the $6.83 billion refinanced across all of 2025. Both figures were the largest single-quarter totals recorded for either refinancing category across the full 2025 year.

Source: ABS Lending Indicators, Table 27, Personal Finance Fixed Term Loans by Purpose, 2025.

What Financial Pressure Are Australians Under?

A Primara survey of 1,000 Australians found 45.2% describe themselves as just getting by financially, while one in ten said they are struggling to meet their financial obligations. The 45.2% who described themselves as just getting by was 35.2 percentage points higher than the one in ten who said they are struggling to meet their obligations.

Mortgage-Free Australians by Generation

60.5% of Australians surveyed said they don't currently have a mortgage. This varies sharply by generation: 84.3% of Baby Boomers said they are mortgage-free, compared with 68.5% of Gen Z respondents. The gap between Baby Boomers and Gen Z on mortgage-free status was 15.8 percentage points. The remaining 39.5% of Australians surveyed said they do currently have a mortgage. Baby Boomers were mortgage-free at 1.23 times the rate of Gen Z respondents.

Source: A Primara survey of 1,000 Australians, 2026.

Financial Pressure Sits Alongside High Mortgage-Free Rates

The finding that most Australians surveyed do not currently have a mortgage does not mean most are free of financial pressure. With 45.2% describing themselves as just getting by and one in ten struggling to meet their financial obligations, the financial strain reported in this survey is not confined to those currently repaying a home loan.

Source: A Primara survey of 1,000 Australians, 2026.

How Many Australians Have Had a Personal Loan?

A Primara survey of 1,000 Australians found 55.5% said they have held a personal loan at some point, while 15.6% said they currently have one, meaning most Australians who have ever held a personal loan have since paid it off or otherwise no longer hold it.

What Australians Use Personal Loans For: Larger Purchases

Among those who have held a personal loan, 63.8% said they used it to buy a vehicle such as a car, motorbike, or caravan, making vehicle purchases the single largest reported use. Household goods or appliances followed at 27.7%, with home renovation or improvement at 18.7%, education or study at 10.8%, and solar panels or energy upgrades at 8.6%. The 63.8% share buying a vehicle was 36.1 percentage points ahead of the next largest category, household goods or appliances. Solar panels or energy upgrades, at 8.6%, sat 2.2 percentage points behind education or study at 10.8%, the next lowest larger-purchase category.

Source: A Primara survey of 1,000 Australians, 2026.

How Do People Deal With Unexpected Costs?

Beyond planned purchases, personal loans are also used to cover unexpected costs: 30.0% of personal loan holders said they used a loan to repair a vehicle, 20.9% for medical or dental costs, 5.8% for funeral or bereavement costs, and 4.2% for legal fees. Debt consolidation was the single most cited one-off cost use at 33.3%, ahead of travel or holiday at 32.7% and day-to-day living costs at 31.5%.

Source: A Primara survey of 1,000 Australians, 2026.

Why Do Australians Take Out Personal Loans?

55.3% of Australians surveyed who have held a personal loan said they took it out for a planned expense, while one in three said their loan covered a mix of planned and emergency costs. This is 22.0 percentage points higher than the roughly one in three who cited a mix of planned and emergency costs.

Planned Versus Emergency Borrowing by Generation

The mix of planned and emergency borrowing is far more common among younger Australians: 43.7% of under-45s who have held a personal loan cited a mix of planned and emergency needs, compared with 22.7% of over-45s, a gap of 21 percentage points between the two age groups. Under-45s cited this mix at 1.93 times the rate of over-45s.

Source: A Primara survey of 1,000 Australians, 2026.

Why Choose a Personal Loan Over Other Options?

39.7% of personal loan holders cited a savings shortfall as the top reason they chose a personal loan over other financing options, the single most commonly cited reason in the survey. Two in three view personal loans as a legitimate financial tool, and 36.5% specifically see them as a useful option when other choices have been exhausted. The remaining 60.3% of personal loan holders cited a reason other than a savings shortfall for choosing a personal loan over other financing options.

Source: A Primara survey of 1,000 Australians, 2026.

How Quickly Do Australians Need Personal Loan Funds?

73.9% of Australians who have held a personal loan said they needed the money within a week, and 43.8% said they needed it within two days. The gap between those needing funds within a week and those needing funds within two days was 30.1 percentage points.

Where Australians Get Their Personal Loans

48.1% of personal loans held by those surveyed were with one of the big four banks, while 15% were with a non-bank or online lender. Non-bank and online lenders appear to have found a niche among borrowers who prioritise a fast, digital-first application process, consistent with the high share of borrowers in this survey who said they needed funds within days rather than weeks. The remaining 51.9% of personal loans held by those surveyed were with a lender other than one of the big four banks. The big four banks' 48.1% share was 33.1 percentage points ahead of the 15% share held by non-bank or online lenders.

Source: A Primara survey of 1,000 Australians, 2026.

What Do People Do If Their Loan Has Been Declined?

21.67% of personal loan holders said they have been declined by a bank at some point. Of those who were declined, 34.7% said they then applied to a non-bank lender and were approved. Separately, 18.9% of those declined said they abandoned the purchase they were seeking finance for altogether.

Source: A Primara survey of 1,000 Australians, 2026.

What Do Australians Look for When Choosing a Personal Loan Provider?

The number one factor Australians look for when choosing a personal loan provider is no hidden fees, cited by 69.3% of those surveyed as the most important factor. Averaged together, the two leading factors, no hidden fees and a low or competitive interest rate, were cited by 68.4% of Australians surveyed.

Fees and Rates Together Define Trust in a Lender

A low or competitive interest rate was the second most cited factor, at 67.5%, sitting close behind no hidden fees. Together, these two figures point to transparency on both fees and rate as the combination Australians value most when choosing where to take out a personal loan, a gap of just 1.8 percentage points between the two.

Source: A Primara survey of 1,000 Australians, 2026.

Confidence in Understanding the True Cost of a Loan

91.5% of personal loan holders surveyed said they were confident they understood the full cost of their loan before signing, and three in four said they were satisfied with their decision to take out a loan. Confidence in understanding the full cost of a loan, at 91.5%, ran 16.5 percentage points ahead of the three in four who reported satisfaction with their borrowing decision. This confidence figure ran 22.2 percentage points ahead of the 69.3% who cited no hidden fees as the top factor in choosing a lender.

Source: A Primara survey of 1,000 Australians, 2026.

How Are Personal Loans Used for Car Repairs, Renovations and Travel?

Among Australians open to using a personal loan for travel, 49.2% said they would use it for an international holiday, the single most cited use case for travel lending.

How Australians Pay for Car Repairs

When it comes to significant car repairs, 51.4% of Australians surveyed will pay from savings, and 25.7% will use a credit card. Personal loans are also part of the mix, with 30.0% of personal loan holders reporting they have used a loan for vehicle repair at some point. The 51.4% paying from savings was 25.7 percentage points ahead of the 25.7% using a credit card.

Source: A Primara survey of 1,000 Australians, 2026.

Renovations Australians Would Fund With a Personal Loan

A kitchen or bathroom renovation was the highest-rated use case for a personal loan among renovation projects, with 35.5% of Australians surveyed saying they would consider a personal loan for this purpose. 34.8% said they would not use a personal loan for any renovation, and of those who have used a personal loan for a renovation, 57.55% said they were satisfied with the outcome. The 35.5% who would consider a personal loan for a kitchen or bathroom renovation sat just 0.7 percentage points ahead of the 34.8% who would not use a personal loan for any renovation at all.

Source: A Primara survey of 1,000 Australians, 2026.

Confidence and Reluctance Around Travel Lending

31.1% of Australians open to travel lending cited knowing their total repayments upfront with no surprises as their main source of confidence in using a personal loan for travel. At the other end, 27.9% said they would not consider a personal loan for travel under any circumstances. Travel sits alongside debt consolidation and day-to-day living costs as one of the more commonly cited one-off uses for a personal loan, at 32.7% of personal loan holders.

Source: A Primara survey of 1,000 Australians, 2026.