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2.59%

Variable

2.64%

Reduce Home Loans

$1.6k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.45

/ 5
More details

1.98%

Fixed - 1 year

2.38%

Homestar Finance

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.70

/ 5
More details

2.06%

Fixed - 3 years

2.38%

Homestar Finance

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.90

/ 5
More details

2.68%

Variable

2.69%

Suncorp Bank

$1.6k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.71

/ 5
More details

2.14%

Fixed - 1 year

2.46%

UBank

$1.5k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.23

/ 5
More details

2.59%

Fixed - 5 years

2.53%

UBank

$1.6k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.84

/ 5
More details

3.03%

Variable

2.70%

UBank

$884

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.25

/ 5
More details

Learn more about home loans

Why should you compare mortgage rates?

The right mortgage rates can make an enormous difference to your unique financial situation, whether you're applying for your first home loan, or refinancing an existing mortgage.

But what are the differences between the variable, fixed, split and comparison rates that are available from different lenders?

By putting the details of a variety of home loan offers all in one place, RateCity can help you forecast the effects of mortgage rates on your budget.

You'll also have the option to narrow down your shortlist of lenders to only those offering the rates and features that will ideally suit your lifestyle.

How do mortgage rates affect my home loan?

When you compare mortgage rates, you'll see how the lower the interest rate you pay on your home loan, the more you can save in home loan interest charges over time.

For example, imagine you have 20 years left on your mortgage and you refinance from a home loan with an interest rate of 4.50% to one at 4.00%. Here's how much you could save, based on the size of your outstanding debt:

$300,000 $500,000 $700,000
Total repayments at 4.5% $455,508 $759,179 $1,062,851
Total repayments at 4.0% $436,306 $727,176 $1,018,047
Potential interest savings $19,202 $32,003 $44,804

Above hypothetical examples are for illustrative purposes only. Calculations source: MoneySmart

What are variable mortgage rates?

Many of the home loans available in Australia have variable mortgage rates, which rise and fall over the lifetime of the loan.

These rates are typically based on Australia's official cash rate, which is set by the Reserve Bank of Australia – when the RBA meets and brings the cash rate up or down, the nation's lenders often raise or lower their mortgage rates accordingly.

By choosing a variable rate after your mortgage rate comparison, your monthly repayments may be reduced if interest rates are cut, saving you some money and providing you with some financial flexibility.

But if interest rates rise, you may find yourself having to pay more for your mortgage than you initially bargained for, which could put you at risk of mortgage stress.

What are fixed mortgage rates?

Another option to consider is fixing the interest rate on your home loan for a few years, so your finances can stay insulated from the effects of rate rises.

A fixed rate mortgage can help to keep your household budgeting nice and simple, as your repayments remain the same from month to month for the duration of the fixed term.

However, fixing your home loan means that if mortgage rates fall, you won't enjoy the benefit of savings on your monthly repayments, as you'll still be locked into your fixed rate.

Breaking from the predetermined repayment plan can often prove quite expensive in terms of break costs, so you may not enjoy as much financial flexibility from a fixed rate home loan.

A fast guide to mortgage stress

Households suffer mortgage stress when 30% or more of their pre-tax household income is being swallowed by mortgage repayments.

Life becomes stressful at this point because once households have paid for their mortgage, their day-to-day essentials, and other fixed costs, they will have little if any money left over. That's why it's so important to factor in interest rate rises before taking out a mortgage.

Go to a home loan calculator and punch in some numbers. Could you afford the mortgage repayments if interest rates rose by 1, 2 or 3 percentage points? If the answer is no, you may need to think long and hard before you compare mortgage rates and take out a home loan, because a rate change could place you in mortgage stress.

What are split mortgage rates?

Some lenders allow you to enjoy the best of both worlds between variable and fixed mortgage rates with the help of a split rate home loan.

In a split rate mortgage, a fixed rate of interest is charged on a percentage of your loan, and a variable rate of interest is charged on the remainder.

The fixed percentage helps to keep your mortgage repayments relatively stable if rates rise, while the variable percentage allows you to benefit from some savings if mortgage rates fall.

What is a comparison rate?

The comparison rate isn't another interest rate option like variable, fixed or split mortgage rates. Instead, it's a figure used to estimate the approximate total cost of different mortgage options during your mortgage rate comparison.

Most lenders charge fees as well as interest on the home loans they offer, which can make a significant impact on their total cost to borrowers.

When you compare mortgage rates, you may discover that a mortgage with a low interest rate and high fees can sometimes turn out to be more expensive than a mortgage with a higher interest rate and lower fees.

To make the total cost of different mortgage offers clearer to borrowers, lenders are required to provide comparison rates for each of their home loans.

A comparison rate combines the interest rate of a mortgage with its standard fees and charges, and expresses the total as a single percentage.

This can make comparing the approximate total cost of different home loans side by side much simpler.

It's important to remember that even a home loan's comparison rate may not take its every cost into account - some loans have nonstandard costs associated with some of their optional features that aren't included when calculating its comparison rate.

Plus, some home loans come with extra features that can provide additional value, which also isn't accounted for in the comparison rate.

How does your loan term affect your mortgage rate?

When making a mortgage rate comparison, it's important to consider the impact your interest rates could have on your finances in relation to the length of your home loan's term.

Most home loans start with a term of 25 or 30 years, though shorter and longer options are available.

Paying a home loan off over a longer period will involve making a greater number of repayments, each one for a smaller percentage of the loan's principal.

While these smaller repayments may be more affordable from month to month, you may ultimately end up paying more interest in total over the lifetime of the loan than you would by making larger monthly repayments.

Conversely, a shorter home loan term means making a smaller number of repayments, each one for a larger percentage of the loan's principal.

While these repayments may be less affordable from month to month, the smaller number of interest payments may mean ultimately paying less interest in total over the lifetime of the loan.

Monthly repayments Total interest charged Total loan cost
$500,000 mortgage at 4% interest on a 25 year term $2639 $291,755 $791,755
$500,000 mortgage at 4% interest on a 30 year term $2387 $359,348 $859,348

Above hypothetical examples are for illustrative purposes only. Calculations source: MoneySmart

What kind of borrower are you?

Different home loans may be more appealing to different types of borrowers, and your financial situation could also make an impact on what interest rates you may be eligible for when you compare mortgage rates.

Owner occupiers, whether they are first home buyers or existing homeowners upgrading to new properties, are more likely to be offered lower interest rates on their mortgages than investors. Lenders tend to consider these homeowners to be at lower risk of defaulting on their repayments, since if they did, they'd risk losing their home!

While the flexibility of variable rates may appeal to owner occupiers, first home buyers can often find the stability of fixed rate mortgages useful for managing their repayments while they build up their equity, especially if they're on a discounted introductory rate.

Of course, these borrowers should also remember that these “honeymoon” rates will eventually revert to the lender's standard variable rates, and budget accordingly to ensure they can still afford the repayments.

Investment loans are more likely to have higher interest rates, as lenders generally consider mortgages for investors to be at higher risk of default. Plus, additional government regulations apply to investment home loans.

Whether you're an owner-occupier or an investor, if you're refinancing an existing home loan, your new interest rate will depend on a range of different factors.

Generally, the more equity you have in your current property, the lower the lender's risk when you refinance, and the lower the mortgage rates they can offer as a result.

Mortgage rates from banks and non-banks

When making a mortgage rate comparison for home loans from banks, it's important to also consider whether these loans can provide additional value, such as by bundling access to savings and transaction accounts, credit cards, and other features in with the home loan.

Some banks have relatively strict mortgage lending criteria, offering less flexibility in different financial situations.

Some non-bank lenders offer competitive mortgage rates, as well as flexible lending terms to better suit different household finances.

However, these lenders may not be able to provide the same kind of home loan features and services that are available from certain banks.

For example, some non-bank lenders are online only, and operate with no branches or shopfronts, which means there's no easy option to meet with your lender in person to go through your home loan's paperwork.

Offset accounts and redraw facilities

Even if your lender offers good mortgage rates, there may be home loan options and special features available to make smarter use of your available finances, and to maximise the benefits of a low interest rate.

An offset account is a savings or transaction bank account that's linked to your home loan, so that any money paid into this account is included when calculating your interest, which can help to limit the size of your repayments.

For example:

If you have a home loan for $500,000, have paid off $200,000 so far, and also have $15,000 in your offset account, the lender will calculate your interest charges as if you owed $285,000 rather than $300,000, resulting in a slightly smaller repayment.

If you pay extra money onto your home loan, and get ahead of your repayment schedule, a redraw facility can allow you to withdraw these surplus funds from your loan (subject to the lender's terms and conditions).

This can allow you to put more of your money towards clearing your mortgage debt ahead of schedule, bringing you closer to making an early exit from the loan, while remaining confident that you'll be able to access these funds again if you need to manage an unexpected expense.

How to shop for mortgage rates

While it's important to compare mortgage rates when selecting a home loan, there's plenty more to consider when looking at mortgage offers from different lenders:

  1. Are you applying for a new home loan, or refinancing an existing mortgage?
  2. Are you an owner occupier or an investor?
  3. Would you prefer a variable, fixed, or split mortgage rate?
  4. What are the fees? Have you looked at the comparison rate?
  5. How long is your loan term? Can you afford the repayments on your income?
  6. What mortgage features do you want? Can you get these, plus an affordable mortgage rate, from a bank or non-bank lender?

RateCity puts information on a wide variety of home loans all in one place, so you can quickly and efficiently compare mortgage rates, features and benefits, and narrow down your shortlist of potential loans to only those that best fit your financial situation.

Why you should compare mortgage rates when conducting a home loan health check

A home loan is the biggest financial commitment that most people will ever make. It's not just a big commitment, but a long commitment - generally 25 to 30 years.

That's why a home loan should never be a "set-and-forget" product e.g. something you take out and then forget about for the next two or three decades.

Instead, it should be something you review on a regular basis to ensure you're getting the best mortgage rates, the best fees and the best features for your household's unique needs.

In other words, it's time for your home loan health check.

How do mortgage interest rates affect your home loan's health?

One reason to conduct regular home loan health checks is because a seemingly small difference in mortgage rates can make a big difference over the term of a loan.

Some people don't refinance their mortgage because they don't compare mortgage rates and realise there are credible lower-rate options on the market.

Other people do know about these options, but never get around to refinancing because they keep telling themselves, "There's no rush, I'm only paying a few dollars extra per month.

However, a small reduction in monthly repayments can add up to a big reduction in total repayments over the life of the loan.

The cheapest loan isn't necessarily the best loan, but the interest rate is always an important factor when assessing the pros and cons of a mortgage.

By conducting a home loan health check, you can not only get an idea of how your home loan interest rate compares to the rest of the market, but you can also consider several alternative mortgage options.

Fees in your home loan health check

Conducting a home loan health check shouldn't mean just making a mortgage rate comparison. It's also important to look at home loan fees.

Many home loans come with ongoing fees, which can include:

  • monthly fees
  • annual fees
  • offset account fees

Borrowers can also be slugged with fees for making use of some home loan features, like redrawing funds or making additional repayments.

Some lenders also get you on the way out by charging a discharge fee when you finally close the loan.

Fees can be a bit like interest rates in that paying a bit more in the short term can lead to a paying a lot more over the loan's full term.

Imagine, again, that you have 20 years left on your mortgage and you switch to a home loan with lower fees. Here are the sort of savings you might receive:

  • $100 per year = $2,000 over 20 years
  • $200 per year = $4,000 over 20 years
  • $300 per year = $6,000 over 20 years
  • $400 per year = $8,000 over 20 years
  • $500 per year = $10,000 over 20 years

Still not convinced about the benefits of a home loan health check?

How to refinance a mortgage

Once you've done a home loan health check and mortgage rate comparion, if you decide you do want to switch home loans, you'll have to refinance your mortgage.

How refinancing works:

  • Imagine you have a mortgage with Lender X, with an interest rate of 4.50%, outstanding debt of $300,000, and a remaining loan term of 20 years.
  • After comparing more than 100 lenders, you decide you like the look of Lender Y, which is offering a comparable product to Lender X, but with a mortgage interest rate of just 4.00%.
  • If you ultimately decide to refinance, Lender Y would repay your debt to Lender X – you would owe nothing to your old lender, and owe $300,000 to your new lender instead.

However, there are several refinancing traps to bear in mind before signing on the dotted line.

Did you check the comparison rate?

First, you should confirm that when you did your home loan comparison as part of your home loan health check, you considered the 'comparison rate', not just the 'advertised rate'.

The advertised rate only indicates the cost of mortgage interest, and doesn't include fees or other charges.

The comparison rate does factor in the costs of these types of fees and charges, giving you a better idea of a loan's total overall cost.

With some loans, there will be no gap between the advertised and comparison rates, while others will have a significant gap of one percentage point or higher.

Will you need to pay fees? And what for?

Second, if you do refinance, you may have to pay a range of fees to both lenders.

Your old lender may slug you with a discharge fee, and if you're exiting a fixed-rate loan ahead of schedule, you will probably have to pay break costs as well.

Your new lender will probably charge you any combination of standard set-up fees – establishment fee, valuation fee and settlement costs. All these fees could easily add up to more than $1000.

Are property values likely to fall?

A third trap to be aware of is the potential danger of refinancing in a falling market.

Imagine that when you bought the property it cost you $500,000 and you borrowed $400,000. That would have given you a loan-to-value ratio (LVR) of 80% and allowed you to avoid paying Lenders Mortgage Insurance, which is generally only payable if you have an LVR above 80%.

Now imagine that, two years later, you've decided to refinance, having reduced your debt to $385,000 – but having also seen the value of your property fall to $475,000.

When Lender Y values your property as part of the refinancing process, it will discover that your LVR is now 81% and charge you LMI, which could cost you thousands.

Are you refinancing into a longer home loan?

Finally, you should make sure that your new loan term matches your old one. The default loan term for many mortgages is 30 years, so if you're not careful, you could accidentally exit from a mortgage that has 20 years left to run with Lender X, and sign up for a new 30-year mortgage with Lender Y.

This could end up costing you more money, even if the mortgage interest rate is lower:

  • The total repayments for a $300,000 mortgage over 20 years at 4.50% is $455,508
  • The total repayments for a $300,000 mortgage over 30 years at 4.00% is $515,609

That's a difference of over $60,000!

Above hypothetical examples are for illustrative purposes only. Calculations source: MoneySmart

You could save tens of thousands

Conducting regular home loan health checks is a no-brainer. After all, they're quick, easy and free, plus there's no obligation to refinance.

A home loan health check might reveal that there are alternative loans out there with mortgage rates, fees and features that could save you literally tens of thousands of dollars over the lifetime of your loan.

Frequently asked questions

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

What is the difference between fixed, variable and split rates?

Fixed rate

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

What is a comparison rate?

The comparison rate is a more inclusive way of comparing home loans that factors in not only on the interest rate but also the majority of upfront and ongoing charges that add to the total cost of a home loan.

The rate is calculated using an industry-wide formula based on a $150,000 loan over a 25-year period and includes things like revert rates after an introductory or fixed rate period, application fees and monthly account keeping fees.

In Australia, all lenders are required by law to publish the comparison rate alongside their advertised rate so people can compare products easily.

How do I calculate monthly mortgage repayments?

Work out your mortgage repayments using a home loan calculator that takes into account your deposit size, property value and interest rate. This is divided by the loan term you choose (for example, there are 360 months in a 30-year mortgage) to determine the monthly repayments over this time frame.

Over the course of your loan, your monthly repayment amount will be affected by changes to your interest rate, plus any circumstances where you opt to pay interest-only for a period of time, instead of principal and interest.

What is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

What are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

What is the best interest rate for a mortgage?

The fastest way to find out what the lowest interest rates on the market are is to use a comparison website.

While a low interest rate is highly preferable, it is not the only factor that will determine whether a particular loan is right for you.

Loans with low interest rates can often include hidden catches, such as high fees or a period of low rates which jumps up after the introductory period has ended.

To work out the best value for money, have a look at a loan’s comparison rate and read the fine print to get across all the fees and charges that you could be theoretically charged over the life of the loan.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

What is an ongoing fee?

Ongoing fees are any regular payments charged by your lender in addition to the interest they apply including annual fees, monthly account keeping fees and offset fees. The average annual fee is close to $200 however there are almost 2,000 home loan products that don’t charge an annual fee at all. There’s plenty of extra costs when you’re buying a home, such as conveyancing, stamp duty, moving costs, so the more fees you can avoid on your home loan, the better. While $200 might not seem like much in the grand scheme of things, it adds up to $6,000 over the life of a 30 year loan – money which would be much better off either reinvested into your home loan or in your back pocket for the next rainy day.

Example: Anna is tossing up between two different mortgage products. Both have the same variable interest rate, but one has a monthly account keeping fee of $20. By picking the loan with no fees, and investing an extra $20 a month into her loan, Josie will end up shaving 6 months off her 30 year loan and saving over $9,000* in interest repayments.

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

How can I negotiate a better home loan rate?

Negotiating with your bank can seem like a daunting task but if you have been a loyal customer with plenty of equity built up then you hold more power than you think. It’s highly likely your current lender won’t want to let your business go without a fight so if you do your research and find out what other banks are offering new customers you might be able to negotiate a reduction in interest rate, or a reduction in fees with your existing lender.

What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002