Home loan rates do not move as one neat market. Two lenders can respond differently to the same economic conditions, and two customers at the same bank may not always receive the same rate.

Understanding why can help you look beyond the headline.

What Goes Into a Home Loan Rate?

The cash rate is important, but lenders also consider:

• The cost of customer deposits and wholesale funding

• Competition for new borrowers

• Credit and operational costs

• The lender’s appetite for particular loan types

• Profit margins and pricing strategy

• The level of risk attached to an application

These factors can move at different speeds, which is why a lender may pass on all, some or none of a cash rate change.

Your Rate Can Also Be Personal

The rate offered may depend on your loan-to-value ratio, repayment type, property use and overall application strength.

Owner-occupier and investment loans may be priced differently. The same applies to principal and interest versus interest-only repayments. Some lenders also reserve sharper pricing for new customers or borrowers within certain equity bands.

Compare More Than the Advertised Rate

A low advertised rate can be attractive, but it may come with fees, limited features or eligibility conditions.

Compare:

• The actual rate available to you

• The comparison rate

• Application, package and ongoing fees

• Offset, redraw and extra repayment rules

• Revert rates after a fixed or introductory period

• The total cost over the time you expect to keep the loan

Final Thoughts

Your existing lender does not automatically remain competitive, and the lowest advertised rate is not automatically the most suitable loan.

Prestige Finance Brokers can compare lender pricing, features and policies against your circumstances to show you where the real value may be.

General information only. The rate available to you will depend on lender criteria and your individual application.