Home News Comparing home loan interest rates: Why bother comparing loans?

Comparing home loan interest rates: Why bother comparing loans?

Font size :
Q .Can you help me understand the point of comparing home loan interest rates…
 
A. You are quite right when you say that the variable rate on your loan can change at any time. That said, the media attention on lenders (particularly banks) means that there is pressure on them to pass on the full savings of a rate cut and to limit any rate rise to the impact a Reserve Bank increase has on their cost of funds. Customer retention is also important to lenders – they are keen to hold on to the business of good loyal customers and randomly increasing interest rates is likely to result in little business from new customers and existing ones deserting to the competition.
 

There has been some debate about the benefit of comparison rate schedules in that these rates only include quantifiable fees as at the comparison date and take no account of any added features of a product. Lenders can and often do introduce new fees during the loan term and while a basic variable loan may suit many borrowers, the added features of some products provided at a marginally higher interest rate may deliver significant benefits and savings to a borrower in the long term. The comparison rate schedule is a snapshot of rates on a date – whether it is a truly meaningful tool for borrowers remains open to question.  

Related: Home Loan Calculator

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks

The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates Read more

Borrowing against the home: A strategy to pay for aged care Borrowing against the home: A strategy to pay for aged care Such debts can generally be divided into long-term and short-term loans ... Read more

NAB slashes growth forecasts for houses, units NAB slashes growth forecasts for houses, units Numerous factors, including tighter credit rules and the growing supply of new stock, have reined in Australia’s seemingly unstoppable housing market boom ... Read more

Broking industry wants to reform commission structures Broking industry wants to reform commission structures It argues that scrapping commissions altogether would push up the interest rates paid by consumers ... Read more

More mortgage news and articles

Sponsored Links

Friday, Jul 21, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords