Real Time Ratings™

Real Time Ratings™ rates over 100 lenders with a score out of 5, based on how much home loans will cost in the first five years and how much flexibility they offer.

What is Real Time Ratings™?

Real Time RatingsTM is a world-first rating system that ranks home loans based on your individual mortgage requirements.

Unlike other home loan rating systems that grade their products once or twice a year, Real Time RatingsTM results are calculated as you use the site, making them as up to date as possible.

Real Time RatingsTM gives each home loan a score out of five stars, based on loan costs and flexibility. It also factors in your loan size, deposit amount and borrowing type so you don’t waste time looking at loans that aren’t applicable to you.

You shouldn’t need a business degree to navigate the home loan market. Real Time RatingsTM does the work for you, so you have the most up-to-date assessment at your disposal.

How we calculate Real Time Ratings™

Each home loan displayed on RateCity’s home loan comparison table has been assessed using an algorithm that compares both the price and features of home loans using a methodology that assesses the value proposition of each product considered relative to its peers.

To arrive at a Total Score, RateCity applies a weight against a Cost Score and Flexibility Score. This method can be summarised as:

Real Time RatingTM = Weighted Cost Score + Weighted Flexibility Score

How is the Cost Score calculated?

The Cost Score of each product is dynamically calculated using the Average Monthly Cost of the product (over 5 years) and is based on the user inputs of the home loan comparison table. Scores are indexed based on the subset of products that meet the criteria of the inputs. E.g. A user that has filtered for owner occupier home loans for $500k will be returned a list of products available for this criteria with the Cost Score of each product indexed against only the other products that meet this criteria.

Each time a user input filter impacting the assumptions of the Average Monthly Cost calculation or the available products is changed, the Cost Score calculations are retriggered. The following table outlines the values used in calculating the Average Monthly Cost for each product:

Product DetailsGeneral Assumption
Advertised interest rate30 year loan term
Revert interest rate (if applicable)Loan amount (based on user input)
Duration of fixed/intro/IO periodStandard payment schedule based on product (Principal & Interest (‘P&I’) or Interest Only ‘IO’)
Upfront, ongoing and discharge feesInterest charged in first 5 years of schedule
Value of upfront bonuses (cashback/rewards points, etc)Cost rounded to 1 decimal place

Average Monthly Cost calculation examples

Calculating an Average Monthly Cost for different types of loans allows for the likely costs to be incurred by a consumer to be compared on a like-for-like basis. 

The formula for calculating the Average Monthly Cost can be summarised as follows:

Average Monthly Cost = 

((Upfront Fees + 60 months of interest + 60 months of ongoing fees + Discharge Fees) - Upfront Bonuses)/60

On a daily basis, an Average Monthly Cost is calculated for each loan on the RateCity database for the following loan amounts: $100k, $200k, $250k, $300k, $400k, $500k, $600k, $700k, $750k, $800k, $900k and $1m 

The following table illustrates how the Average Monthly Cost of four different loans are calculated:


  • Additional assumptions:
  • Repayments are based on a standard loan amortisation schedule for a 30 year term
  • Interest payments for IO loans are calculated by multiplying the loan balance by the monthly interest rate
  • IO loans will remain IO for 5 years for all variable products, Fixed IO products will revert to P&I revert rate at the end of the fixed period
  • Upfront bonuses are either a cashback dollar figure or rewards points, rewards points values are calculated based on the value of a $100 gift card redemption for the points. The value of the bonus is calculated based on the size of the loan where applicable. Ongoing bonuses tied to retention (e.g. x amount of points paid each year you hold the loan) are not accounted for.

Calculating Cost Score from Average Monthly Cost

When calculating the Cost Score from the market of Average Monthly Costs being displayed, outliers are handled such that really low or really high scores are adjusted to fit within the distribution of the rest of the market.

Once outliers have been adjusted, scores are normalised using a Box-Cox transformation. A Box-Cox transformation is a way to transform data so that it is more normally distributed and allows the Average Monthly Costs of home loans to be compared based on the other options in the market.

Following this, scores are scaled to a range between 0 to 5.

How is the Flexibility Score calculated?

Real Time RatingsTM uses discrete scoring (i.e. having a specific feature is worth a specific number of points) and the overall Flexibility Score is based on the aggregated total of all points scored across all features assessed.

The percentage of available points listed below are based on the total number of points achievable for each category as a percentage of the maximum possible number of points achievable in the Flexibility Score. Percentages have been rounded to assist with interpretation of the methodology.

Category Description Percentage of Available Points 
Interest Minimisation50%
Extra RepaymentsAbility to make additional repayments and how many55%
Redraw FacilityAbility to redraw additional repayments and associated fee22.5%
Offset AccountAvailability of a full or partial offset account22.5%
Linked Credit CardNo annual fee credit card included with the home loan45%
Linked Debit CardA debit card linked to home loan allowing access to redraw20%
Withdrawal ChannelsWithdrawal methods available (internet, phone, atm, etc)35%
Repayment Options20%
Repayment Type (PI/IO)Flexibility of repayment types available for the loan30%
Repayment FrequencyRange of available repayment frequencies (w/f/m)30%
Split FacilityAbility to split the loan across variable and fixed terms40%
Additional Features15%
PortabilityAbility and fees to transfer the loan to a different property45%
Repayment HolidayAbility to pause repayments if required20%
Construction FacilityAvailable for construction purposes with progressive drawdown of funds from the loan35%

The sum of all flexibility points scored by a product is then converted into the Flexibility Score using the following process:

Flexibility Score = (Total Flexibility Points of Product / Maximum Total Flexibility Points Scored Across All Products) x 5

Flexibility Scores are calculated hourly for all products, and are based on all home loans in RateCity’s database. All products are indexed once and the same score applies for a product regardless of user inputs.

Applying Weights to Calculate Real Time Ratings

Following the calculation of the Cost Score and the Flexibility Score, a Real Time RatingTM is then calculated by weighting the Cost Score and weighting the Flexibility Score and adding these weighted scores together to come up with the Real Time RatingTM for the product.

This is done using the following weights:


Using the above example, a Cost Score and a Flexibility Score of 4 would result in a Real Time RatingTM of 4.

However, applied to a Cost Score of 3 and a Flexibility Score of 4.5, the resulting Real Time RatingTM would be:

Real Time Rating = (3 x 0.8) + (4.5 x 0.2) 
Real Time Rating = 2.4 + 0.9 
Real Time Rating = 3.3

How often are products reviewed for Real Time RatingsTM purposes?

Real Time RatingsTM are calculated dynamically, whenever the home loans comparison table is loaded or when a user input changes the products displayed in the table. To facilitate this, Average Monthly Costs of all loans are calculated on a daily basis and Flexibility Scores are calculated on an hourly basis.

Does RateCity rate all products available in the market?

We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our Real Time RatingsTM. However, this process is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. 

What makes Real Time Ratings™ unique?

We came up with Real Time Ratings™ because the home loan market has changed. Legacy ratings systems that are based on set loan amounts or calculated once every six or 12 months struggle to provide customers with an accurate assessment.

Loans are bigger

In the year 2000, the national average loan size was $140,000, according to the Australian Bureau of Statistics. In March 2018, it was over $388,000. But the reality is, many borrowers have loans much bigger than that, especially first home buyers in major capital cities.

What this means is the bigger your loan is, the less significant the fees become when assessing the overall cost of your loan.


Cindy is choosing between two loans: one with a 3.7% interest rate and a $400 annual fee vs one with no annual fee but a higher rate of 3.9%.

If the amount she is borrowing is $150K, she would be better off with the 3.9% loan.

If her loan was $800K, she would be better off with the 3.7% loan.

Borrowers switch or upgrade more often

While comparison rates look at the effective cost of a $150,000 loan kept for a full 25-years, the typical mortgage holder will take a 30-year loan and keep it for three to five years, according to industry experts and brokers. Real Time Ratings™ looks at the cost of a 30-year loan kept for five years to give a more representative view of a loan’s cost.

Deals are released more frequently

The combination of tightened lending criteria and a competitive lending environment also means lenders are constantly changing the offers they have in market. We’ve created a way to benchmark these new deals against the rest of the market within a few days of their launch.


To the extent that the information in this report constitutes general advice, this advice has been prepared by RateCity Pty Ltd A.C.N. 122 743 542 Australian Financial Services Licence (“AFSL”) and Australian Credit Licence number (“ACL”) 316710 (“RateCity”). The information has been prepared without taking into account your individual investment objectives, financial circumstances or needs. Before you decide whether or not to acquire a particular financial product you should assess whether it is appropriate for you in the light of your own personal circumstances, having regard to your own objectives, financial situation and needs. You may wish to obtain financial advice from a suitably qualified adviser before making any decision to acquire a financial product. RateCity provides information about credit products. It is not a credit provider and in giving you information it is not making any suggestion or recommendation to you about a particular credit product. Please refer to RateCity’s FSCG  for more information. You should check rates and product information directly with the provider. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD.

The information in this report must not be copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed or resold, or stored for subsequent use for any purpose, in whole or in part, in any form or manner or by means whatsoever, by any person without RateCity’s prior written consent. All information obtained by RateCity from external sources is believed to be accurate and reliable. Under no circumstances shall RateCity have any liability to any person or entity due to error (negligence or otherwise) or other circumstances or contingency within or outside the control of RateCity or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication, or delivery of any such information.

The RateCity Real Time RatingsTM results do not include all providers in the market  and may not compare all features relevant to you. The rating is only one factor to take into account when considering these products. RateCity  acknowledges that past performance is not a reliable indicator of future performance.

Reference to third party products, services or other information by trade name, trademark or otherwise does not constitute or imply endorsement, sponsorship or recommendation of RateCity by the respective trademark owner.

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