Commercial Property Loan Rates Australia 2026
Commercial property loan rates Australia 2026 for non-bank borrowers – Switchboard Finance
Commercial Property Finance
RBA figures · What sets your margin · How to read your own file
The RBA cash rate target is 4.35 percent and average rates on outstanding small business loans were 7.39 percent a year in May 2026. Neither is your rate. No regulator publishes a market-wide average for commercial property loans, because every facility is priced to its own file: a benchmark or reference rate, a lender margin set by your risk, then fees and how the facility resets. This guide gives the current official figures with their limits, explains what actually moves your margin including how bank capital reaches it, shows what a rate change does to your repayment, and walks you through reading your own facility to tell whether your rate is competitive. Written for company, investor and commercial borrowers, not home buyers.
Quick Answer
As at 16 July 2026 the RBA cash rate target is 4.35 percent and the average rate on outstanding small business loans is 7.39 percent a year (RBA Lenders' Interest Rates Table F7, May 2026 data, sources APRA and RBA). Those are backdrop figures across all business lending, not commercial-property rates, and no regulator publishes a market-wide average for commercial property loans. Your own rate is a benchmark or reference rate plus a lender margin, then fees, so compare the total cost over the period you expect to hold the loan, not the headline percentage. See how commercial property loans work.
| Your question | Short answer |
|---|---|
| What are today's anchor numbers? | The RBA cash rate target is 4.35 percent, effective 17 June 2026. Average rates on outstanding business loans in May 2026 were 7.39 percent for small business, 6.08 percent for medium and 5.64 percent for large (RBA Table F7). Backdrop across all business lending, not commercial-property rates. |
| Are rates rising in 2026? | The RBA increased the cash rate target three times in the first half of 2026, then left it unchanged at 4.35 percent on 16 June. The next scheduled decision is 11 August 2026. Your facility follows its own contract, not the announcement date. |
| Is there one market rate? | No. No regulator publishes a market-wide average specifically for Australian commercial property loans; each facility is priced to its own risk. |
| What sets the rate? | A benchmark or reference rate (the cash rate, BBSW or a lender rate) plus a lender margin, then fees and how the facility resets. |
| What is a good rate? | The lowest total cost, fees and break costs included, for your structure and the period you expect to hold the loan. |
| Bank, non-bank or private? | Different funding models and risk appetites; the lowest headline rate and the best fit are not always the same lender. |
| What moves the margin? | LVR, serviceability, security type, lease and tenant strength, documentation, loan size and purpose. No universal cut-offs. |
| Why does the lease change the rate? | Where a commercial exposure depends on property cash flows, APRA requires an ADI to assess the tenancy profile against loan maturity. Without a positive determination the exposure is non-standard, which changes its risk weight and therefore the capital the lender holds against it. |
| Fixed or variable? | Neither is automatically better; it depends on your hold period, tolerance for reset movement, and whether you may refinance. |
| Can a lender quote from the property alone? | Not reliably. A meaningful quote also needs the loan amount and purpose, LVR, repayment source, lease or occupancy, documentation, term and timing. |
| Is an indicative rate an approval? | No. It can change after documents, valuation, credit assessment, final lender approval and legal review. |
What is a good commercial property loan rate in 2026?
A good commercial property loan rate is the lowest total cost and best overall fit for your structure and the period you expect to hold the loan, not simply the lowest advertised percentage. No regulator publishes a market-wide average specifically for Australian commercial property loans, so treat any single headline figure with caution and compare complete offers instead. If you want the fundamentals first, see how commercial property loans work, or talk to us about a commercial property loan.
For wider context, the RBA cash rate target is 4.35 percent, effective 17 June 2026. That is the policy rate the Reserve Bank sets, not the rate on a commercial facility, and commercial rates need not move immediately or one for one with it. The Reserve Bank does publish average business lending rates across all business borrowing, and they are a useful backdrop, but read the qualifier carefully: they are not commercial-property-only rates, and they are not an offer.
| Business size | Outstanding loans (% p.a.) | New loans (% p.a.) |
|---|---|---|
| Small business | 7.39 | 7.26 |
| Medium business | 6.08 | 6.12 |
| Large business | 5.64 | 5.49 |
Basis: RBA Lenders' Interest Rates, Table F7, latest published data (reference month May 2026, sources APRA and RBA), accessed 16 July 2026. These are averages across all business lending, fixed and variable rates and all industries combined. They are not commercial-property-only rates, not non-bank or private rates, and not an offer you can apply for. The current cash rate context is from the RBA cash rate target page, accessed the same day.
The more useful figure is the gap between those averages and the cash rate, because that is the part that reflects lending, not policy. The Reserve Bank does not publish the gap, but it publishes both numbers, so it can be worked out. Business borrowers usually want to know two things: how far above the cash rate a business loan actually sits, and why it costs more than the mortgage on their house. The table answers both from published figures.
| Loan category | Average rate on outstanding loans (% p.a.) | Gap to the 4.35% cash rate target (percentage points) |
|---|---|---|
| Small business | 7.39 | 3.04 |
| Medium business | 6.08 | 1.73 |
| Large business | 5.64 | 1.29 |
| Housing, owner-occupier | 6.20 | 1.85 |
| Housing, investment | 6.43 | 2.08 |
On a phone, swipe the table sideways to compare every column.
Read straight, that says the average small business borrower pays 3.04 percentage points above the cash rate, roughly two and a half times the 1.29 point gap a large business pays, and 1.19 percentage points more than an owner-occupier home loan. Size is the visible pattern: the gap narrows as the borrower gets larger, which is what you would expect if the gap is mostly risk and cost to serve.
Four limits on that arithmetic, and they matter. The gap is not a margin: it is the distance between two separately published figures, and no lender prices by subtracting the cash rate from an average. The F6 and F7 figures are May 2026 monthly averages while the cash rate target moved to 4.35 percent effective 6 May 2026, so the May averages include a few days at 4.10 percent. Both tables cover all business and all housing lending, so neither is a commercial property figure. And these are averages of existing loans, many written years ago on terms unrelated to today's market. Calculated by Switchboard Finance from RBA Tables F6 and F7 and the RBA cash rate target, both accessed 16 July 2026. Indicative context, not a quote or an offer.
Are commercial property loan rates rising in 2026?
The cash rate target entered 2026 at 3.60 percent and is now 4.35 percent, a rise of 0.75 percentage points in three steps, and it has been on hold since June. The Reserve Bank raised the target by 0.25 percentage points effective 4 February 2026 (to 3.85 percent), again effective 18 March 2026 (to 4.10 percent), and again effective 6 May 2026 (to 4.35 percent). At its meeting on 16 June 2026 the Board left the target unchanged, effective 17 June 2026. In that statement the Board said financial conditions are now tighter than they were following those increases, and that it judged it appropriate to leave the target unchanged while it assesses the response to previous rises and the effect of the oil supply disruption. The next scheduled decision is 11 August 2026.
That is the backdrop, not your loan rate. A policy-rate move reaches a commercial facility through funding costs and through your own contract, and those do not share a date. A variable facility that reprices only at its contractual reset will not move on the day of an announcement, and a margin locked for a term does not widen because a benchmark moved. Confirm which benchmark your facility uses, its tenor, and when it resets before you draw any conclusion about direction.
| Effective date | Change (percentage points) | Cash rate target after |
|---|---|---|
| 10 December 2025 | 0.00 (hold) | 3.60% |
| 4 February 2026 | +0.25 | 3.85% |
| 18 March 2026 | +0.25 | 4.10% |
| 6 May 2026 | +0.25 | 4.35% |
| 17 June 2026 | 0.00 (hold) | 4.35% |
| 11 August 2026 | Next scheduled decision | Not yet known |
On a phone, swipe the table sideways to compare every column.
Basis: RBA monetary policy decisions and the RBA cash rate target page, both accessed 16 July 2026. Nothing here is a forecast, and the next decision is a scheduled date rather than a prediction of its outcome. What a tightening or easing backdrop actually means for your facility depends on your benchmark, your reset dates and your margin. If a reset or a maturity is coming, start with our read on refinancing and interest-only structures, or see the property lending hub for the wider picture.
Which commercial property loan rate questions matter for your situation?
The rate drivers that deserve your attention depend on why you are borrowing. Start with your transaction, then compare the factors that can actually change lender fit, total cost and the chance of the deal proceeding.
| Your situation | Rate and approval factors to focus on | Useful next step |
|---|---|---|
| Your facility is maturing or rolling off a fixed rate | Maturity date, remaining fixed term, break method, discharge and exit costs, a current valuation view, your LVR today rather than at settlement, covenants, and how long a lender assessment realistically takes. | Start with the refinance and interest-only guide, then read your own facility against the file-reading table below. |
| A lender has quoted you a rate you think is too high | Whether the quote is priced to your file or to a headline: your LVR on a current valuation, your evidenced repayment source, your security type, your lease against loan maturity, your documentation level and your channel. | Work through the file-reading table before concluding anything. A rate is only high or low relative to what your own file would be quoted today. |
| Your landlord has raised the rent and you are weighing buying | Deposit and LVR, business serviceability, the valuation, repayment type, and the total occupancy cost of buying compared with the rent you are being asked to pay. | Run it through the buy versus lease comparison and the deposit and LVR guide. |
| Buying premises for your business | Deposit and LVR, business serviceability, property valuation, repayment type, loan term and whether the premises suit the business. | Check the deposit and LVR guide and the owner-occupier lending example. |
| Buying a commercial investment | Net rent, tenant strength, lease expiry and options, WALE, vacancy risk, property marketability and valuation. | See how a lender may read the lease and tenant profile. |
| Refinancing an existing facility | Current balance and rate, remaining fixed term, discharge or break costs, new valuation, current LVR, covenants and the total saving after switching costs. | Use the commercial refinance and interest-only guide. |
| Buying under a signed contract | Contract price, lender valuation, settlement date, deposit already paid, finance conditions and the risk that valuation comes in below price. | Read how a commercial property valuation can affect a contracted purchase. |
| Financing specialised property | Alternative use, depth of the resale market, valuation method, operating dependence, location, lender appetite and the strength of the repayment source. | Start with the specialised-security valuation guide. |
| A time-sensitive or policy-exception transaction | Total cost, term, exit path, valuation and legal readiness, repayment source and whether a flexible lender solves the actual problem rather than only settling quickly. | Compare standard commercial finance with private lending and other property-secured options before choosing. |
On a phone, swipe the table sideways to compare every column.
A borrower searching for a rate is often really asking one of three questions: Can I qualify, what will the loan cost over the period I need it, and what could stop the transaction? Answer those before treating any headline percentage as meaningful.
How is a commercial property loan rate calculated?
A commercial property loan rate is usually built from a benchmark or reference rate plus a lender margin, then shaped by fees and the way the facility resets. It is not a single universal formula, and different lenders use different benchmarks. The Reserve Bank notes that variable business loans are typically priced with reference to short-term rates such as the cash rate or BBSW, while new fixed business rates generally follow tenor-matched swap rates. Bank funding costs, competition and the lender's assessed credit risk also influence the rate, so two borrowers can be quoted differently on the same day.
Timing matters too. Some benchmark-linked facilities reprice only at contractual intervals, so a cash-rate change may take longer to flow through to an outstanding rate, and it need not pass through one for one. A variable rate can change at each contractual reset, while a fixed rate holds for a set term. BBSW, the bank bill swap rate, is a short-term Australian-dollar benchmark whose value depends on the tenor and the fixing date, so there is no single undated BBSW number to quote.
| Pricing input | What it does | What to confirm |
|---|---|---|
| Benchmark or reference rate | The starting point the lender prices from, for example the cash rate, BBSW or a lender reference rate. | Which benchmark it is, its tenor, and the fixing or reset basis. |
| Lender margin | The risk and funding component added on top of the benchmark. | Whether it is locked for the term or can be reviewed. |
| Funding cost | The lender's own cost of money, which differs by channel. | How it feeds the rate for a bank, non-bank or private lender. |
| Credit risk assessment | The lender's view of borrower and security risk. | Which specific factors moved your margin up or down. |
| Reset or repricing date | When a variable rate changes after a benchmark move. | The exact reset frequency and any notice terms. |
| Fixed rate, swap based | Certainty for a set term, priced from swap rates. | The break-cost method if you repay or exit early. |
| Fees | One-off and ongoing charges that change the all in cost. | The full fee schedule (see the fees section below). |
On a phone, swipe the table sideways to compare every column.
How do banks, non-banks and private lenders price differently?
Banks, non-banks and private lenders price from different funding models and risk appetites, so the lowest headline rate and the best fit for your situation are not always the same lender. The table below compares the pricing basis rather than naming lenders or quoting rates. Banks are APRA-regulated deposit takers and usually suit strong, standard files with full documentation. Non-bank lenders fund differently and often offer more flexible policy, including lease-doc options. Private lenders concentrate on short-term or specialist situations.
If a private first mortgage is relevant to your situation, start with our private lending guide, and for very short-term needs the caveat loan guide explains where that sits.
| Factor | Bank or ADI | Non-bank lender | Private lender |
|---|---|---|---|
| Funding basis | Deposits and wholesale funding, APRA regulated. | Wholesale or securitised funding, not an ADI. | Private capital or investor funds. |
| Typical orientation | Standard, marketable security and full documentation. | Flexible policy, lease-doc or low-doc options. | Short-term or specialist situations. |
| Documentation | Usually full financials. | Often lighter, lease-doc possible. | Varies, often security focused. |
| Speed | Can be slower on complex files. | Often faster than a bank. | Can be fast where time is critical. |
| Pricing basis | Typically benchmark plus margin. | Priced to its funding and risk model. | Reflects short term and higher risk. |
| Capital rules apply | Yes. APRA prudential standards set collateral, LVR and classification obligations. | No. Not an APRA-regulated ADI. | No. Prices to its own mandate. |
| Best suited to | Strong, standard commercial files. | Files outside standard bank policy. | Time-critical or specialist cases. |
On a phone, swipe the table sideways to compare every column.
What borrower, lease and security factors affect the margin?
The margin reflects how risky the lender considers the loan. Lower leverage, strong serviceability, standard security and a solid lease can support a tighter margin, while the opposite can widen or complicate it. There is no universal LVR cut-off, deposit rule or minimum lease length that applies to every lender.
| Factor | Tends to support a tighter margin | Tends to widen or complicate pricing |
|---|---|---|
| Leverage and LVR | Lower leverage with a comfortable buffer against the assessed value. | Higher leverage, with less room if the valuation moves. |
| Serviceability | Strong and well evidenced from the stated repayment source. | Weaker, or hard to evidence from the records available now. |
| Security type | Standard, marketable property in a location with real depth of demand. | Specialised or thinly traded property with a narrow buyer pool. |
| Lease and tenant | A credible tenant and a lease that comfortably exceeds the loan term. | A short or mismatched lease, material vacancy, or arrears. |
| Documentation | Clean, complete and current, with any oddity already explained. | Limited documentation, unexplained figures, or adverse credit. |
| Purpose and term | A clear purpose and a term that matches the plan. | An unclear purpose, or a term that does not match the exit. |
| Timing and exit | Ordinary timing with a defined and evidenced exit. | Urgent timing with an unclear or untested exit. |
On a phone, swipe the table sideways to compare every column.
Can you borrow 80 percent against commercial property?
There is no published market answer to that, and any figure quoted without your file attached is a guess. What is true is that APS 220 requires an APRA-regulated lender to establish appropriate limits on LVR and to ensure there is appropriate scrutiny of any lending at high LVR, so the ceiling is a lender-by-lender policy setting rather than a market rule, and it moves with the security, the repayment source and the evidence. Standard, marketable security with strong evidenced serviceability sits in a different place from specialised security on limited documentation, at the same requested LVR. Non-bank and private lenders are not bound by APRA's standards at all and set their own positions. The honest answer is that the number you can borrow is an output of your file, not an input you can look up, so establish your position using the file-reading table, then ask.
Lenders measure repayment capacity in different ways, including debt service and interest cover ratios; the definitions and policies vary by lender, so ask which measure applies and how you are assessed (our DSCR glossary entry explains the common one). For APRA-regulated lenders, Prudential Standard APS 220 requires independent collateral valuation processes that reflect fair value and prevailing market conditions, regular reassessment of collateral, and appropriate LVR limits. Those are obligations on the lender, not a single customer LVR maximum that applies everywhere.
Lease strength matters for investment security. APRA's guidance (APG 112) says that, where a commercial exposure depends on property cash flows, the tenancy profile should be assessed relative to loan maturity, and with multiple tenants a lender may consider whether the weighted average lease expiry, or WALE, sufficiently exceeds the loan term. That is credit-risk guidance, not a universal minimum WALE. For the detail behind these factors, see how a valuation is handled when a property is under contract, how specialised security is valued, and how lenders read a lease.
How does bank capital reach your commercial property loan margin?
For an APRA-regulated lender, your file is classified before it is priced, and the classification changes how much capital the loan consumes. Capital is a funding input, so the classification can reach your margin. That is the mechanism sitting underneath the usual advice that LVR, lease and serviceability affect the rate. It applies to ADIs. A non-bank or private lender is not bound by these standards and prices to its own funding and risk model, which is one reason the same file can be quoted very differently across the three channels.
| What APRA requires or guides | Where it sits | How it can reach your price |
|---|---|---|
| Repayment capacity comes first | APS 220 requires an ADI to assess credit risk primarily on the strength of the borrower's repayment capacity, and not to place undue reliance on collateral as a substitute for a comprehensive credit assessment. | Strong security does not rescue a weak repayment source, and offering more property is not a pricing lever on its own. |
| Tenancy profile against loan maturity | APG 112 states that where a commercial property exposure depends on cash flow from the property, the ADI must assess the tenancy profile relative to the maturity of the loan and reach a positive determination that the borrower can meet repayments; otherwise the exposure is non-standard. | A lease that runs out before the loan matures is a classification question, not only a comfort question. |
| WALE where there are multiple tenants | APG 112 states that with multiple lessees an ADI's assessment may consider whether the weighted average lease expiry sufficiently exceeds loan maturity. | WALE is an input to that assessment. It is not a universal minimum you can look up. |
| Standard versus non-standard | Under APG 112, risk weights for property exposures are determined by loan type (residential, commercial, or land acquisition, development and construction) and by whether the exposure is classified standard or non-standard. | Classification changes the capital held against the loan, and capital is a cost the lender carries and prices. |
| Independent valuation at fair value | APS 220 requires valuations to be appraised independently of the credit origination, assessment and approval process, and to reflect fair value taking account of prevailing market conditions such as the time taken to realise the security. | The valuer's figure, not your contract price, sets the LVR the lender prices from. |
| The marketing period assumption | APS 220 Attachment A says that in determining the fair value of property security an ADI must assume a marketing period of up to 12 months, although a longer period of up to a maximum of 24 months may be adopted for specialised or unusual properties where professional valuers advise it is appropriate. | This is why specialised security can value lower than an owner expects for the same physical asset. |
| LVR limits are the lender's own | APS 220 requires an ADI to establish appropriate limits on LVR and to ensure there is appropriate scrutiny of any lending at high LVR. | The obligation sits on the lender to set and police a limit. There is no single market LVR maximum. |
| The 3 percent buffer is a housing rule | The serviceability buffer of at least 3.0 percent in APS 220 Attachment C is expressed as a residential mortgage lending requirement. Attachment C's commercial property requirement is different: an ADI must be able to limit lending for land acquisition, development and construction, and lending for investment purposes. | Do not assume the housing buffer applies to your commercial file. Commercial serviceability is set by lender policy, so ask what buffer or cover ratio is actually applied to you. |
On a phone, swipe the table sideways to compare every column.
Basis: APRA Prudential Standard APS 220 Credit Risk Management, in force 1 January 2023, and APRA Prudential Practice Guide APG 112, both accessed 16 July 2026. These are obligations and guidance directed at APRA-regulated lenders, summarised here and not reproduced in full, and none of them is a customer rule you can apply to your own file. For the detail, see how specialised security is valued and how a lender reads a lease.
Full doc, alt doc or low doc: what changes?
Your documentation level does not change the cash rate. It changes the margin on top of it, and it changes which lenders will look at you at all. The cash rate target is 4.35 percent for every borrower in Australia. What differs between a full doc file and an alt doc file is the evidence you can produce, how the lender calculates serviceability from it, and therefore the risk it prices. That is why comparing an alt doc quote against a headline full doc rate is comparing two different files, not two prices.
| Documentation level | What you produce | How serviceability is assessed | What it tends to change |
|---|---|---|---|
| Full doc | Generally two years of financial statements and tax returns, ATO integrated client account, recent BAS, bank statements, and the lease and rent schedule where the property is tenanted. | Calculated from the financials themselves, with the figures traceable to a lodged return. | The widest lender set, including APRA-regulated banks. The sharpest pricing available to a given file generally sits here. |
| Alt doc or lease doc | A shorter evidence set: often BAS plus bank statements, sometimes an accountant's declaration. Lease doc relies on the lease and rent schedule rather than the borrower's financials. | Inferred from rent, turnover or another proxy rather than derived from full financials, so the lender is accepting a less complete picture. | A narrower lender set, weighted to non-banks. Tends to carry a pricing loading and sometimes a lower LVR ceiling than the same file would reach on full doc. |
| Low doc | A declaration of income with limited supporting evidence. | Largely asserted rather than evidenced, which throws more weight onto the security and the exit. | The narrowest lender set and the largest loading. Security quality and LVR do most of the work. |
On a phone, swipe the table sideways to compare every column.
On the rate difference between them, be careful what you believe. You will find doc-level rate differentials quoted online, usually as a range. None of them come from a published lender source. No Australian lender publishes a commercial property rate card by documentation level, and no regulator publishes an average by documentation level either, which is why the RBA's Table F7 stops at business size. Every published range is a broker's observation of their own lender panel. That is real information and often useful, but it is not verifiable data, it is not a rate card, and it will not tell you what your file gets.
There is a prudential reason full doc tends to price better, and it is not arbitrary. APS 220 requires an ADI to assess credit risk primarily on the strength of the borrower's repayment capacity, and to obtain adequate information to undertake a comprehensive credit assessment. Less evidence does not make a file less risky in reality; it makes the risk less measurable, and an unmeasured risk gets priced. That is also why moving from alt doc to full doc is sometimes the cheapest thing a borrower can do, and why the honest first question is not what rate you can get, but which documentation level you can actually reach this quarter.
What information do you need for a meaningful commercial property loan rate quote?
A meaningful rate quote needs enough information to price both the borrower and the security. A percentage given without the loan purpose, amount, property, LVR, repayment source, documentation, term and timing is usually a headline indication rather than a decision-ready comparison.
| Information to have ready | Why it changes lender fit or pricing | Useful detail to provide |
|---|---|---|
| Loan purpose and amount | A purchase, refinance, equity release or cash-out request can be assessed differently, and the amount affects lender appetite and fixed transaction costs. | Required loan amount, purpose of every component, purchase price or current debt being refinanced. |
| Property and occupancy | Property type, location, condition, marketability and whether it is owner-occupied, leased or partly vacant affect security risk. | Address, property type, current use, purchase price or estimated value, and who occupies it. |
| Deposit, equity and current debt | These determine the proposed LVR and whether there is enough equity after costs. | Cash contribution, existing secured debt, other property offered, and expected transaction costs. |
| Repayment source | The lender needs to understand whether repayments depend mainly on business cash flow, rent, another income source or a defined exit. | Business financial performance, rent received, other income, and any material existing commitments. |
| Lease and tenant profile | For investment property, rent, tenant quality, lease expiry, options, incentives and vacancy risk can affect both serviceability and valuation. | Current lease, rent schedule, tenant details, expiry and option dates, occupancy and any arrears or incentives. |
| Documentation available | Full financials, BAS, bank statements, accountant information or lease evidence can lead to different lender pathways and margins. | What is current and available now, what is still being prepared, and whether any figures need explanation. |
| Term and repayment preference | Interest-only versus principal-and-interest, facility term, amortisation and reset structure change repayments, flexibility and total cost. | Expected hold period, preferred repayment type, likely refinance or sale plans, and whether flexibility matters more than certainty. |
| Timing and known complications | A contract date, maturing facility, valuation issue, credit event, covenant concern or complex ownership structure can change the lender set. | Required settlement or refinance date, entity structure, credit issues, existing covenants and anything likely to appear during assessment. |
On a phone, swipe the table sideways to compare every column.
A broker or lender can often narrow the likely pathway from a concise scenario summary, but an indicative rate is not an approval. Pricing and terms may change after documents are checked, the property is valued, credit assessment is completed and the lender issues its final offer.
Do owner-occupied and investment properties price differently?
They can, but not in a fixed direction. The real difference is the repayment source and how much the lender relies on lease income, not a blanket rule that one is always cheaper than the other.
| What the lender looks at | Owner-occupied premises | Commercial investment property |
|---|---|---|
| Main repayment source | The business's own trading cash flow. | Lease income from the tenant or tenants. |
| What the assessment leans on | Business serviceability and the property valuation. | Tenant strength, lease term, WALE and the valuation. |
| The risk that carries most weight | Trading performance, and whether the premises actually suit the business. | Vacancy, re-letting and lease expiry risk. |
| How APRA guidance frames it | APG 112 gives an SME loan secured by commercial property but serviced from business revenue as an example of an exposure not dependent on property cash flows. | Where the exposure does depend on property cash flows, the tenancy profile must be assessed relative to loan maturity. |
| Direction on price | Not automatically cheaper. | Not automatically dearer. |
On a phone, swipe the table sideways to compare every column.
Because the risk sits in different places, the same borrower can be priced differently on an owner-occupied purchase and an investment purchase. See our reads on owner-occupier commercial property loans and on buying versus leasing your premises.
Is a fixed or variable commercial property loan rate better?
Neither is automatically better. A fixed rate gives repayment certainty for a term but can carry a break cost if you repay or exit early, while a variable rate can move at each reset, in either direction. The right choice depends on how long you plan to hold the loan, your appetite for repayment movement, and whether you may refinance.
Break costs are not a fixed dollar figure. They are calculated from the movement in wholesale rates over your remaining fixed term, so they can be small or material depending on timing. Ask the lender how the break cost is worked out before you fix. If you are weighing interest-only or a future refinance, see our read on refinancing and interest-only structures.
What does a rate change actually do to your repayment?
Work the arithmetic before you work the anxiety. On an interest-only balance, the extra interest from a rate change is simply the balance multiplied by the change. It is worth doing on your own numbers, because the figure is often smaller than the fear and occasionally much larger. The table shows extra interest per year, before fees, for a rate that moves by the amounts across the top.
| Loan balance | Rate up 0.25% | Rate up 0.50% | Rate up 1.00% | Rate up 2.00% |
|---|---|---|---|---|
| $500,000 | $1,250 | $2,500 | $5,000 | $10,000 |
| $1,000,000 | $2,500 | $5,000 | $10,000 | $20,000 |
| $2,000,000 | $5,000 | $10,000 | $20,000 | $40,000 |
| $3,000,000 | $7,500 | $15,000 | $30,000 | $60,000 |
| $5,000,000 | $12,500 | $25,000 | $50,000 | $100,000 |
On a phone, swipe the table sideways to compare every column.
Illustration only, and not a quote, an offer or a prediction of any rate movement. It is straight multiplication of balance by rate change, on an interest-only basis, before fees, with no compounding, no day-count adjustment and no principal reduction. A principal-and-interest repayment changes differently, because the amortisation period matters as well as the rate. To get a monthly figure, divide by twelve: on an illustrative 1,000,000 dollar balance, a 1.00 percentage point rise is about 10,000 dollars a year, or roughly 833 dollars a month, before fees.
Two things this arithmetic cannot tell you, and both matter more than the number. When it applies to you depends on your reset date, not on any announcement date. Whether it applies at all depends on whether your rate is fixed, whether your margin is locked, and what your contract says. Read the next section against your own facility.
Is my commercial property loan rate too high?
You cannot answer that against a headline. You can only answer it against your own file. A rate is not high or low in the abstract; it is high or low relative to what a file like yours would be quoted today, and no published average tells you that because no published average knows your LVR, your lease or your evidence. So instead of comparing your rate to a number you read somewhere, establish what your own file actually says. Then the comparison becomes possible.
Everything in the table below is in a document you already have. Most borrowers who think their rate is uncompetitive have never read all ten rows.
| What to establish | Why it changes the comparison | Where to find it |
|---|---|---|
| Your benchmark, its tenor and your reset date | A rate priced to a three month benchmark and one priced to a lender reference rate behave differently and reprice on different days. | Letter of offer or facility agreement, interest rate clause. |
| Your margin, and whether it is locked | The margin is the part that reflects you. Splitting it from the benchmark is the only way to see what you are actually being charged for risk. | Letter of offer, pricing schedule. |
| Your remaining fixed term and the break method | If you are fixed, the exit question comes before the rate question, and the break cost is calculated, not fixed. | Facility agreement, prepayment or break clause. |
| Your LVR on a current valuation, not on settlement | Your leverage today is what a lender prices, and a revaluation moves it even when the loan does not. | Loan balance from your latest statement, divided by a current assessed value. |
| Your repayment source as the lender sees it | Business cash flow and lease income are assessed differently, and it changes which lenders fit. | Financials, BAS, rent roll, lease schedule. |
| Your lease against your loan maturity | A lease running past maturity and a lease running short of it are different files, not different opinions. | The lease: expiry date, option dates, rent review mechanism. |
| Your documentation level | Full financials, lease-doc and low-doc reach different lender pathways at different prices. | What you can produce today without preparing anything new. |
| Your channel | A bank rate and a non-bank or private rate are not comparable numbers, because they are priced from different funding. | Who your lender is, and whether it is an APRA-regulated deposit taker. |
| Your fees, annualised over your hold period | Two facilities with the same rate can have very different total costs once establishment, annual, exit and break costs are counted. | Fee schedule in the letter of offer, plus your annual statements. |
| Your covenants and reporting obligations | A cheap rate with tight covenants and revaluation rights is not obviously cheaper than a slightly dearer rate without them. | Facility agreement, covenants and undertakings. |
On a phone, swipe the table sideways to compare every column.
Once you have those ten, you have a file rather than a number, and a file can be compared. That is the point at which a broker or another lender can tell you something useful, and the point at which asking your current lender whether the margin can be reviewed is a conversation rather than a request. If your position has genuinely improved since the facility was written, that is the evidence you would put in front of them. Send us the file and we will tell you where it sits.
Which fees belong in the all in cost?
Compare the total dollar cost over the period you expect to hold the loan, including every fee, not just the interest rate. A lower headline rate with heavier fees can cost more than a slightly higher rate with light fees, especially on a short hold.
| Cost item | What it is | Why it matters to the all in cost |
|---|---|---|
| Interest rate | The headline rate on the facility. | Sets the base cost, but not the whole cost. |
| Establishment fee | One-off set-up or application fee. | Weighs more heavily on short holds. |
| Valuation fee | Cost of the lender's property valuation. | Can be higher for specialised security. |
| Legal fee | Documentation and settlement legal costs. | Varies with facility complexity. |
| Annual or line fee | Ongoing facility fee. | Adds up across the whole hold period. |
| Discharge or exit fee | Charged when you repay or leave. | Affects the case for refinancing. |
| Fixed-rate break cost | Payable if you exit a fixed rate early. | Depends on the calculation; can be significant. |
On a phone, swipe the table sideways to compare every column.
One more comparison point: a statutory consumer comparison rate is designed for consumer credit, so it is not generally a like-for-like tool for business-purpose commercial finance (Moneysmart explains what a comparison rate is in a consumer context). Rather than rely on it, ask each lender for a full schedule of interest, fees, break costs and repayments so you can compare the total cost. This is general information, not legal advice. When you are ready, we can help you compare offers on a commercial property loan.
How do you turn a commercial property loan rate quote into a decision?
Turn a rate quote into a decision by comparing the complete facility over the period you expect to use it, then checking the terms that could change your repayments, flexibility, refinance options or ability to settle.
- Separate the benchmark from the margin. Confirm the reference rate, margin, reset frequency and whether the margin can be reviewed during the term.
- Model the cost over your expected hold period. Include interest, establishment, valuation, legal, annual, exit and break costs, not only the first-year rate.
- Test the repayment structure. Compare interest-only and principal-and-interest where available, confirm the amortisation period, and understand any balloon or residual balance at the end of the facility term.
- Stress the repayment. Check what the repayment would look like if the benchmark rose, the interest-only period ended or a refinance took longer than expected.
- Read the control terms. Review covenants, revaluation rights, reporting requirements, guarantees, conditions before drawdown and events that allow repricing.
- Check the exit before entering. Confirm discharge, early repayment and fixed-rate break terms, plus the practical refinance or sale path at maturity.
- Separate indicative terms from approved terms. Record what still depends on documents, valuation, credit assessment, legal review or lender committee approval.
What usually happens after you choose a lender pathway?
- Scenario fit. The borrower, property, purpose, amount, timing and available documents are matched to a suitable lender pathway.
- Indicative comparison. Likely rate structure, fees, LVR, term, repayment type and key conditions are compared on a consistent basis.
- Evidence and valuation. The lender reviews the required documents and normally arranges or accepts a valuation under its policy.
- Formal assessment. Credit, property, entity, legal and any lease issues are assessed before a final approval or offer is issued.
- Documents and settlement. Loan and security documents are completed, conditions are satisfied and the facility proceeds to settlement or refinance.
The exact sequence varies by lender and transaction. The practical goal is to expose the important questions early, before valuation, legal work and a looming settlement date make changing direction more expensive.
Can you negotiate, reprice or refinance the rate?
Sometimes. What you can change depends on your facility terms, your current risk position, and whether a refinance genuinely improves the total cost. Your contract, not the headline market, controls when a rate is reviewed or repriced.
A practical review checklist: confirm your reset dates and how the benchmark is applied; ask whether the margin can be reviewed if your risk position has improved; check discharge, exit and break costs before you move; and get a fresh valuation view, because a revaluation can change your LVR and your leverage. Watch any loan covenants, since a breach can have consequences that depend entirely on the facility terms. If a refinance looks worthwhile, our read on refinancing and interest-only walks through the triggers, and our deposit and LVR guide covers how equity affects pricing.
From our broking files, general and without a rate figure
Across the commercial property enquiries we see, the files that attract tighter pricing tend to share a few features, and the ones that widen or complicate pricing share the opposite. The pattern is consistent even though the numbers are not.
- Tighter pricing tends to follow lower leverage, strong and well-evidenced serviceability, standard and marketable security, a credible tenant and lease profile, clean documentation, a clear purpose and a sensible term.
- Wider or more complicated pricing tends to follow higher leverage, specialised or thinly traded security, a short or mismatched lease, weaker serviceability, limited documentation, adverse credit, urgent timing and an unclear exit.
- The same headline rate can produce a very different total cost once establishment, valuation, legal, annual, exit and break costs are included.
- A good rate is the best all in fit for your structure and intended hold period, not automatically the lowest advertised percentage.
Broker-observed and indicative only, as at 16 July 2026, from Switchboard lender-panel and quote-book observations across commercial property enquiries. Not a quote, an offer, an approval indication, a rate promise, a savings claim or a forecast. Actual pricing depends on the borrower, property, lease, valuation, LVR, serviceability, documentation, facility structure, lender policy and market conditions at the time of application.
There is no single published market-wide rate for a commercial property loan, so the useful answer is a decision-ready comparison rather than one headline number. The rate is a benchmark or reference rate plus a lender margin, shaped by your LVR, serviceability, security, lease and documentation, and then by fees and how the facility resets. For an APRA-regulated lender there is a mechanism underneath that: classification sets the risk weight, the risk weight sets the capital, and capital is a cost that reaches your margin. The RBA cash rate is background context, not your loan rate. Compare complete offers side by side on the all in cost, ask each lender how the rate is built and how the break cost works, and before you decide your own rate is uncompetitive, read your own facility against the ten rows above.
Key takeaway: you cannot price your loan against a headline. You can only price it against your own file.Frequently Asked Questions
There is no single best rate, because no regulator publishes a market-wide average specifically for commercial property loans and every facility is priced to its own risk. For context, the RBA cash rate target is 4.35 percent effective 17 June 2026, and average rates on outstanding business loans in May 2026 were 7.39 percent for small business, 6.08 percent for medium and 5.64 percent for large. Those are backdrop figures across all business lending, not commercial-property rates. The best rate for you is the lowest total cost, including fees and break costs, for your structure and the period you expect to hold the loan.
The policy backdrop tightened. The RBA increased the cash rate target three times in the first half of 2026, then left it unchanged at 4.35 percent on 16 June 2026, with the next scheduled decision on 11 August 2026. That is not the same as your loan rate rising. A variable facility moves at its contractual reset, not on the announcement date, and a fixed rate does not move at all during its term.
You cannot answer that against a headline, only against your own file. A rate is high or low relative to what a file like yours would be quoted today, and no published average knows your LVR, your lease or your evidence. Establish ten things from your own documents first: your benchmark and reset date, your margin and whether it is locked, your remaining fixed term and break method, your LVR on a current valuation, your repayment source, your lease against loan maturity, your documentation level, your channel, your annualised fees, and your covenants. Then the comparison becomes possible.
Using the RBA's published figures for May 2026 against the 4.35 percent cash rate target, the average rate on outstanding small business loans is 7.39 percent, a gap of 3.04 percentage points. Medium business is 6.08 percent, a gap of 1.73 points, and large business is 5.64 percent, a gap of 1.29 points. For comparison, owner-occupier housing is 6.20 percent, a gap of 1.85 points, so the average small business pays about 1.19 percentage points more than an owner-occupier home loan. This is the distance between two separately published figures, not a lender margin, and none of these are commercial-property-only rates.
Generally yes, but the cash rate is the same either way. Documentation level does not change the benchmark; it changes the margin on top of it and which lenders will consider the file at all. No Australian lender publishes a commercial property rate card by documentation level, and no regulator publishes an average by documentation level, which is why the RBA's Table F7 stops at business size. Every doc-level rate range you find online is a broker's observation of their own lender panel rather than published data.
Usually as a benchmark or reference rate plus a lender margin, then adjusted for fees and how the facility resets. Variable loans are typically priced to short-term rates such as the cash rate or BBSW, and new fixed rates generally follow tenor-matched swap rates. Funding costs, competition and assessed credit risk also affect the margin, so it is not one universal formula.
No. The cash rate target, currently 4.35 percent, is the RBA's policy rate, not your loan rate. It influences funding costs and can flow through to lending rates, but commercial rates need not move immediately or one for one, and some benchmark-linked facilities only reprice at contractual reset dates.
BBSW, the bank bill swap rate, is a short-term Australian-dollar benchmark used as a reference rate for some variable business facilities. Its value depends on the tenor and the fixing date, so there is no single undated BBSW number. Ask your lender which benchmark and tenor your facility uses and when it resets.
Loan-to-value ratio is one of several pricing factors. Lower leverage generally reduces the lender's risk and can support a tighter margin, while higher leverage can widen it. APS 220 requires an APRA-regulated lender to establish appropriate limits on LVR and to apply appropriate scrutiny to lending at high LVR, so the ceiling is a lender-by-lender policy setting rather than a market rule. There is no universal LVR maximum that applies to every lender.
They can be, but not in a fixed direction. The difference is the repayment source: owner-occupied premises are repaid mainly from business cash flow, while investment property relies on lease income, so tenant strength and lease term carry more weight. APG 112 gives an SME loan secured by commercial property but serviced from business revenue as an example of an exposure not dependent on property cash flows. It is not true that owner-occupied property always receives a lower rate.
Yes. Standard, marketable property in a strong location with a credible tenant and a lease that comfortably exceeds the loan term tends to support tighter pricing. Specialised or thinly traded property, or a short or mismatched lease, can widen or complicate pricing. APRA guidance asks lenders to assess tenancy profile against loan maturity, though there is no universal minimum lease length.
Include establishment, valuation, legal, annual or line, discharge or exit fees, and any fixed-rate break cost, alongside the interest rate. Compare the total dollar cost over the period you expect to hold the loan. A lower headline rate with heavier fees can cost more than a slightly higher rate with light fees.
Neither is automatically better. A fixed rate gives repayment certainty for a term but can carry a break cost if you exit early, while a variable rate can move up or down at each reset. The right choice depends on your hold period, your tolerance for repayment movement, and whether you may refinance.
Sometimes. What you can change depends on your facility terms and your current risk position. You can ask whether the margin can be reviewed if your position has improved, and you can compare a refinance, weighing discharge, exit and break costs against the saving. Your contract controls when a rate is reviewed or repriced.
It can, depending on your facility. A revaluation can change your LVR and leverage even when the loan amount is unchanged, and some facilities allow a margin review or other consequences if a covenant is breached. None of this is automatic; it depends on the facility terms and the lender's decision, so check your contract.
What sources support this guide?
This guide is built on primary sources: the Reserve Bank of Australia for the cash rate and business lending context, APRA's prudential standard and guidance for how ADIs assess collateral, classify property exposures and read leases, the RBA and ASX for BBSW context, and ASIC and Moneysmart for the limits of consumer comparison rates when assessing business-purpose commercial finance. Each was read again for this update, and every dynamic figure is shown with its source and date beside it. The table shows what supports each claim and how current the source is.
| Source | What it supports | As at |
|---|---|---|
| RBA cash rate target | The current cash rate target of 4.35 percent and that it is a policy rate rather than a commercial loan rate. | Effective 17 June 2026; accessed 16 July 2026 |
| RBA monetary policy decisions | The three increases in the cash rate target in the first half of 2026, the 16 June hold, and the 11 August 2026 next decision date. | Accessed 16 July 2026 |
| RBA Lenders' Interest Rates, Table F7 | Average business lending rates by business size, used as an indicative backdrop only. | May 2026 data, sources APRA and RBA; accessed 16 July 2026 |
| RBA banks' funding costs and lending rates | How short-term rates, funding costs, competition and assessed credit risk can influence lending rates. | Accessed 16 July 2026 |
| APRA APS 220 and APRA APG 112 | ADI obligations and guidance on credit assessment, collateral valuation independence and fair value, the up to 12 month marketing period assumption (extending to a maximum of 24 months for specialised property on valuer advice), LVR limit setting, tenancy profile against loan maturity, and the standard versus non-standard classification that drives property risk weights. The at-least 3.0 percent serviceability buffer in APS 220 Attachment C is a residential mortgage lending requirement. | In-force material, APS 220 in force 1 January 2023; accessed 16 July 2026 |
| RBA interest-rate benchmarks and ASX | What BBSW is and why a quoted BBSW value needs a tenor and fixing date. | Accessed 16 July 2026 |
| ASIC National Credit Code guidance and Moneysmart loans guidance | Why a statutory consumer comparison rate is generally not a like-for-like comparison tool for business-purpose commercial finance, and why other terms and contingent costs still matter. | Accessed 16 July 2026 |
On a phone, swipe the table sideways to compare every column.
Regulatory positions are summarised, not reproduced in full, and none of this is legal, tax or financial advice. Dynamic figures such as the cash rate and the business lending averages can change, and your own facility and quote govern, so confirm the detail with the current source pages and your lender or broker before you act.
FBAA Accredited
