Interest rate vs comparison rate

The interest rate is what you pay on the loan. The comparison rate is what ASIC requires lenders to publish so you can see the true cost, fees included.

4 min read·Reviewed 17 July 2026·Ratesniffers Editorial Team

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

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 application fees, monthly account fees, and discharge fees are baked in.

	Interest rate	Comparison rate
What it measures	Interest charged on the balance	True cost including most fees
Includes fees?	No	Yes, application, ongoing, and most account fees
Standardised basis	None, varies by loan	$150,000 loan over 25 years, P&I
Required by ASIC?	Shown, but not standardised	Yes, must appear beside every advertised rate
Best used to	See the headline cost	Compare two loans apples-to-apples

When is the comparison rate misleading?

It also doesn't include cashback, discharge fees, break costs, or LMI. For investors or refinancers, the comparison rate is a starting point: you still need to model your specific scenario.

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 we sort by comparison rate by default

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.

A well-known direct-to-consumer brand that regularly publishes a comparison rate near the sharp end of the market is ING's current rates. For a customer-owned alternative, see Newcastle Permanent's current rates. And among the major international banks operating in Australia, HSBC's current rates. Smaller customer-owned mutuals publish a comparison rate for every product too, among them The Capricornian's current rates. and GMCU's current rates.

Interest rate vs comparison rate: frequently asked questions

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. 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 application fees, monthly account fees, and discharge fees are baked in.

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 also doesn't include cashback, discharge fees, break costs, or LMI. For investors or refinancers, the comparison rate is a starting point: you still need to model your specific scenario.

Why we sort by comparison rate by default

References

ASIC RG 234: Advertising financial products and services (including credit), Comparison-rate disclosure rules
National Consumer Credit Protection Act 2009 (Schedule 1), Statutory comparison-rate basis ($150k / 25 years)
ASIC MoneySmart: Comparison rates, Plain-English consumer guidance

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