Home loan comparison rate vs interest rate

What is the difference between the interest rate and the comparison rate?

The interest rate is the percentage applied to your loan balance to calculate interest charges. The comparison rate is the same loan expressed including most upfront and ongoing fees, calculated against a standardised $150,000 loan over 25 years on a P&I basis.

Use the comparison rate to shortlist loans on a like-for-like fee basis. It is not a personalised quote. The statutory definition sits in the comparison rate glossary; this guide is about when that figure helps and when the $150,000 / 25-year model misleads on a real loan.

ASIC requires every advertised mortgage rate in Australia to display a comparison rate alongside it (National Consumer Credit Protection Act, Schedule 1). It exists because two loans with the same headline rate can have wildly different true costs once ascertainable upfront and ongoing credit fees are included.

The mandated wording next to that figure, the comparison rate warning, spells out the $150,000 loan over 25 years basis the number is built on, so you know exactly what it does and doesn't capture before comparing two offers.

How big is the comparison rate gap right now?

Across 30 verified owner-occupier variable lenders at 80% LVR (October 2026), the average interest rate is 6.54% p.a. against an average comparison rate of 6.65% p.a., a gap of 0.11 percentage points from fees folded into the standardised $150,000 / 25-year model. At the wide end, Credit Union SA advertises 6.34% p.a. but carries a 6.70% p.a. comparison rate, a 0.36 point gap from its package and ongoing fees.

Is a comparison rate the same as a fixed or variable rate?

No. Fixed and variable describe how the interest rate behaves: a fixed rate stays the same during its fixed period, while a variable rate can change. A comparison rate combines the interest rate with most fees on a standard loan example. Fixed and variable products can each have a comparison rate.

Compare variable home loan rates or fixed home loan rates using the same loan purpose, repayment type and LVR. For fixed loans, match the fixed term too. Then check fees and conditions using your own loan amount and remaining term.

When is the comparison rate misleading?

The standardised $150K / 25-year basis is now almost laughably low. Most Australian home loans are $400K-$1M+ over 30 years. Fixed-dollar fees (a $395 annual package fee, say) are amortised over a much longer balance and term in real life, so the comparison rate overstates the impact of those fees.

It is not a complete cost quote. Government charges, costs such as redraw or early-repayment fees, and savings such as fee waivers sit outside the standard warning's calculation. Do not assume every discharge fee is excluded: check the lender's published basis. For investors or refinancers, the comparison rate is a starting point: model extra repayments on your actual balance with the extra repayments calculator, then check refinance home loans or the refinance savings calculator against the loan you already hold.

Use comparison rate to filter out obviously fee-laden loans. Use a real repayment calculation against your actual loan size to make the final call.

Why does Ratesniffers sort by comparison rate by default?

When you compare home loan rates Australia, every leaderboard on Ratesniffers sorts by comparison rate ascending. It's the closest single-number proxy for total cost that ASIC mandates lenders publish, so it's the only sort order that's apples-to-apples across every lender we track. The Australian home loan rate index uses the same comparison-rate ranking for its advertised 80% LVR sample. Use the Ratesniffers Rate Index Report. It is free to cite. Dated sample averages also sit on the average home loan rate page.

What does a comparison rate include and exclude?

A comparison rate includes the interest rate plus most standard upfront and ongoing fees on the statutory $150,000 / 25-year principal-and-interest example. Government charges are excluded, and the statutory warning identifies redraw fees, early-repayment fees and fee-waiver savings as separate considerations. Ascertainable discharge fees can be included; check the lender disclosure rather than treating them as universally excluded. Ask separately about insurance and product-specific charges. Use it as a benchmark, not as a complete cost quote for your own loan.

Two loans with the same headline rate can show different comparison rates when one carries a package fee or an application fee. That gap is the point of the figure. It is still not a quote for a larger loan or a different term.

Why is the comparison rate based on $150,000 over 25 years?

ASIC requires that standardised example so advertised rates can be compared on the same loan size and term. Most Australian home loans are larger and often run for 30 years, so a fixed-dollar fee looks heavier in the comparison rate than it does on a larger balance.

That is why the comparison rate is a filter, not the last step. After you shortlist, model the scheduled payment and any extra repayments on your actual balance and remaining term.

When should I use a repayment or extra-repayment calculator instead?

Use the comparison rate to shortlist products on a like-for-like fee basis. Use a real repayment calculation when you need the scheduled payment on your balance and term: enter the actual interest rate, not the comparison rate. Keep the remaining term the same when comparing payments, then account for upfront and annual fees separately. Use the extra repayments calculator when you want to see how additional monthly payments or a lump sum change interest and payoff time in a monthly model.

Neither calculator replaces the comparison rate, and the comparison rate does not replace a model of your own loan. They answer different questions. Ask each lender for a Key Facts Sheet using the same loan amount, term and repayment assumptions; MoneySmart explains how to compare the sheets.