The comparison rate explained

What it is

Moneysmart describes the comparison rate as "a single figure that combines the interest rate and most fees". It is a way to compare the overall cost of different loans. A loan with a low interest rate and high fees can have a higher comparison rate than a loan with a slightly higher rate and no fees.

How it is calculated

Lenders show a comparison rate beside an advertised home loan rate. CommBank's published comparison rate warning describes the standard basis as a $150,000 secured loan over a 25-year term, and says the comparison rate is "true only for examples given and may not include all fees and charges". Different terms, fees or loan amounts might produce a different comparison rate. The rate combines the interest rate with certain loan-related fees and charges.

What it includes and leaves out

Included: the interest rate and most upfront and ongoing fees that apply to the loan, such as application and monthly or annual service fees.

Not included (per the lender warning above):

• government charges, such as stamp duty or mortgage registration fees;
• fees for optional features or events that may never occur, such as early repayment or redraw fees;
• fees that were not available when the comparison rate was calculated;
• savings, such as fee waivers or the benefit of an interest offset.

So the comparison rate does not show break costs on a fixed loan, discharge fees when you leave, lenders mortgage insurance, or the value of an offset account.

Why it differs for your loan

The standard example is $150,000. If your loan is $600,000, a fixed monthly fee matters far less to you than the example suggests, because it is spread over a bigger balance. The reverse also applies: a fee that is a percentage of the loan matters more. The comparison rate is a screen, not a quote for you.

See the gap in live data

RateSonar records both rates when the lender publishes a comparison rate. As at 2 Nov 2026, for the lowest standard owner-occupier variable loan from each of the four major banks:

The gap between advertised and comparison rate comes from fees. The lowest advertised variable rate in the data is 5.69% with a comparison rate of not published (Aaa Financial Corporation Portfolio Loan). Open home loan rates to see both rates for each loan, and the recorded date. Where the comparison rate shows "not published", the lender did not publish one in its data, so ask for it.

How to use it

1. Compare loans of the same type: owner-occupier with owner-occupier, variable with variable.
2. Look at the advertised rate and the comparison rate together. A big gap means fees are doing the work.
3. Ask for the fee schedule and add up the fees that apply to your balance and plans.
4. Add the things the comparison rate leaves out: break cost, discharge fee, LMI, offset value.
5. Compare in compare rates, then ask your preferred lender for a written quote.