Home loan comparison rates explained

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A guide to comparison rates

Updated March 07, 2024
Written by James Hurwood
Reviewed by Stephen Zeller

Home loan interest rates

Confused by the different types of home loan interest rates? Let Selling Houses Australia host, Andrew Winter, explain the differences for you.
Andrew Winter
Home Loans

Expert tips for understanding the comparison rate

As General Manager of Money at Compare the Market, Stephen Zeller knows it’s crucial that consumers understand what a comparison rate is and how it works in order to make a more informed decision when it comes to their home loan. To help prospective homebuyers with this, he has some tips:

Stephen Zeller
General Manager – Money

Comparison rates are a general indicator

Be mindful of the fact that the advertised comparison rate from a lender is based on a loan amount of $150,000 over a 25-year period. You would be surprised how much the comparison rate can change once you incorporate your actual proposed loan amount and loan term.

Comparison rates can be less useful for fixed rate loans

Whilst a comparison rate is a good indicator to see how competitive a variable rate option is, for fixed rate loans it can be a different story, as the comparison rate is only considering the fixed rate for the fixed term itself, plus whatever the revert rate is. Some lenders revert rates are quite high, and most customers either re-fix their loan or negotiate a lower variable rate (or refinance).

We’re here to help!

If you’re unsure as to whether the loan product you’re looking at is competitive, feel free to contact one of our Home Loan Specialists who can help you with crunching the numbers and see how we can save you money.

Understanding the comparison rate

What is a home loan comparison rate?

How are comparison rates calculated?

What isn’t included in a comparison rate?

How do comparison rates work for variable interest rates?

What else uses a comparison rate?

Making use of the comparison rate

Where do you find the comparison rate?

What does the comparison rate mean for you?

Comparison rate versus advertised interest rate

Why would a comparison rate be lower than the advertised interest rate?

What is the ‘best’ comparison rate?

Meet our home loans expert, Stephen Zeller

Stephen Zeller
General Manager – Money

Stephen has more than 30 years of experience in the financial services industry and holds a Certificate IV in Finance and Mortgage Broking. He’s also a member of both the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and the Mortgage and Finance Association of Australia (MFAA).

Stephen leads our team of Home Loan Specialists, and reviews and contributes to Compare the Market’s banking-relating content to ensure it’s as helpful and empowering as possible for our readers.

1Australian Bureau of Statistics. Lending indicators. April 2023

2Australian Securities & Investments Commission. National Credit Code. April 2023.