Commercial loan rates in Australia are not published as one number the way many home loan rates are. Lenders quote each commercial property loan after assessing the deal, so two borrowers asking for the same amount can be offered very different pricing.
The starting point in 2026 is the cash rate. The Reserve Bank lifted the cash rate target by 0.25 percentage points to 4.60%, effective 30 September 2026 (RBA), which feeds into lenders’ funding costs and variable benchmarks.
On top of that base, the lender adds a margin for the risk it sees in your loan, charges fees, and attaches conditions such as covenants and annual reviews. This guide explains how those pieces fit together, what moves your rate up or down, and what to send for a quote worth comparing.
What are commercial loan rates in Australia in 2026?
Commercial loan rates in 2026 are best understood as a base plus a margin. The base reflects the lender’s cost of funds, which is shaped by the cash rate and wholesale markets. The margin reflects how risky the lender thinks your particular loan is.
That is why we don’t publish a “current commercial rate” on this page. Any single figure would be wrong for most readers, because a low-LVR owner-occupied warehouse with strong business accounts is priced very differently from a higher-LVR retail investment with a short lease. Advertised commercial rates, where lenders show them, are usually starting points that apply only to the strongest deals.
The practical answer is to get indicative pricing on your actual deal from lenders whose policy fits it, then compare the full offer, not just the headline rate.
How are commercial property loan rates set?
Most commercial property loan rates are built in three layers:
- Benchmark or base rate: the lender’s own reference rate, or for some facilities a market benchmark, which tends to move with the cash rate and funding conditions.
- Risk margin: an amount added for your deal, based on LVR, security, borrower strength, lease income and term.
- Fees and conditions: establishment, line or facility fees, valuation and legal costs, plus covenants and review clauses that affect what the loan costs you over time.
Business.gov.au suggests reviewing your business’s financial health and working out the maximum repayment you can afford before you apply, and notes that lenders usually want to see a business plan (business.gov.au, accessed October 2026). For commercial property, the security and lease carry just as much weight as the business numbers.
How does the cash rate affect commercial loan rates?
The cash rate influences what banks and other lenders pay to fund their lending, so changes usually flow through to variable commercial pricing over time. The RBA’s most recent move took the target to 4.60% on 30 September 2026, up from 4.35% set in May 2026 (RBA).
How quickly and how fully a change reaches your loan depends on the facility. Some variable loans follow the lender’s benchmark directly. Others are tied to a market reference rate and reprice on set dates. Fixed-rate facilities don’t change until the fixed period ends, but break costs may apply if you exit early. Check your letter of offer rather than assuming a commercial loan behaves like a residential variable loan.
What factors change the rate you are offered?
The margin a lender adds comes from its view of risk. These are the main levers.
| Pricing factor | What the lender looks at | Usual effect on your rate |
|---|---|---|
| LVR | Loan amount against the lender’s valuation | Lower LVR often prices better; higher LVR may cost more or not be available |
| Property type | Office, retail, industrial, mixed-use, specialised | Mainstream property usually prices better than specialised or hard-to-sell assets |
| Lease and tenant | Lease length, tenant strength, vacancy, rent history | Long leases to established tenants usually support sharper pricing |
| Owner-occupied or investment | Whether your business or a third party occupies it | Assessed differently; business cash flow matters more for owner-occupiers |
| Borrower financials | Accounts, tax returns, existing debt, credit history | Strong, well-documented financials support a lower margin |
| Loan term and repayments | Term, principal and interest or interest-only | Longer terms or interest-only periods can change pricing and conditions |
| Fixed or variable | Whether you lock the rate | Fixed pricing reflects expected future rates; variable follows the benchmark |
| Location | Metro, regional, depth of buyer market | Assets in deeper markets are often easier for lenders to accept |
| Loan size and complexity | Amount, entities, guarantors, multiple securities | Complex structures can add cost or narrow lender choice |
For more on how LVR and deposit interact, see our guide to commercial property loan deposits and LVR.
Are commercial loan rates higher than home loan rates?
Often, yes. Lenders generally treat commercial property and business income as higher risk than a standard owner-occupied home loan. Commercial values can be more sensitive to vacancy and lease terms, and fewer buyers may exist for some assets if the lender needs to sell.
The gap isn’t fixed. A strong commercial deal can price close to the better end of the market, while a weaker one may only be accepted by specialist or non-bank lenders at a higher margin. Comparing your loan with a home loan rate is less useful than comparing it with offers for similar commercial deals.
Should you choose a fixed or variable commercial rate?
There is no universal answer, and NewGen doesn’t give advice on which suits your business. Common trade-offs to weigh:
- Variable: moves with the lender’s benchmark, so repayments rise and fall; usually more flexible to repay early or refinance.
- Fixed: repayment certainty for the fixed period; break costs can apply if you sell, refinance or repay early.
- Split or partly hedged: some lenders allow a mix, which can balance certainty and flexibility.
Think about how long you plan to hold the property, how sensitive your cash flow is to rate changes, and whether you may sell or refinance within the term. Your accountant can help model the cash-flow side.
What fees should you compare alongside the rate?
Fees can change the real cost of a commercial loan as much as a difference in margin. Ask each lender to set out:
- establishment or application fees
- line, facility or account-keeping fees
- valuation and legal costs (yours and the lender’s)
- annual review fees
- break costs for fixed facilities
- discharge or exit fees
Put every offer on the same basis, for example the total cost over the expected hold period, so you are comparing like with like.
How do covenants and reviews affect the real cost?
Covenants are conditions you agree to keep while the loan runs. Common examples include a maximum LVR, a minimum interest cover ratio, minimum lease terms, and requirements to provide annual financials or rent rolls.
A lower rate with tight covenants can be the weaker deal. If a revaluation pushes the LVR over a limit, or a tenant leaves and interest cover drops, the lender may be able to reprice, ask for more security or require a paydown, depending on the terms. Read the review and covenant clauses closely before accepting an offer.
What should you send for a commercial loan quote?
A lender or broker can only give a reliable indication when they can see the deal. Use this checklist:
- Loan purpose: purchase, refinance, equity release or a mix
- Property address, type, size and zoning
- Purchase price or current estimated value, and contract if signed
- Loan amount and your contribution
- Lease details: tenant, rent, lease term, options and outgoings (or business occupancy if owner-occupied)
- Two years of business financial statements and tax returns
- Recent business bank statements and current debt schedule
- Borrowing entity details: company, trust, individuals and any guarantors
- Existing loan statements if refinancing
- Your timing: contract dates, settlement or refinance deadline
With this in hand, lenders can confirm whether the deal fits their policy and indicate pricing, subject to valuation and full assessment.
How do owner-occupied and investment commercial rates differ?
| Pathway | What drives the assessment | Watch-outs |
|---|---|---|
| Owner-occupied commercial loan | Your business cash flow and financials, plus the property | Repayments need to suit your trading cycle |
| Commercial investment loan | Lease income, tenant strength and lease term, plus your financials | Vacancy or a short lease can limit LVR or raise pricing |
| Commercial refinance | Current loan conduct, updated valuation, lease position | Switching costs and new covenants need checking |
If you already have a commercial facility and are weighing a switch, our commercial refinance guide covers the break-even and covenant checks.
What mistakes do borrowers make when comparing commercial rates?
- Comparing headline rates without putting fees on the same basis
- Ignoring covenant and review clauses that allow repricing
- Assuming every lender treats the property type the same way
- Requesting quotes before financials and lease documents are ready
- Choosing a fixed term that doesn’t match the planned hold period
How can a broker help you compare commercial loan rates?
A commercial finance broker can check which lenders are likely to accept your property and borrower profile, collect indicative pricing on the same information, and line up fees, covenants and terms side by side. Our explainer on what a commercial finance broker does covers the process in more detail.
NewGen compares commercial property lending options for Sydney and NSW borrowers. All pricing and approval is subject to lender assessment, and lending criteria, fees and charges apply. When your details are ready, you can start a commercial loan enquiry.