5.49% in the big print. 6.07% in the small print beside it. Same loan, same lender, same ad. That second figure is the comparison rate, the closest thing a home loan in Australia has to an honest price tag, and it changes which loan wins more often than most borrowers expect. Learn to read it and look-alike offers sort themselves in a minute.
Timing matters here. The RBA has lifted the cash rate three times in 2026, to 4.35%, and held it there in June; the next decision lands on Tuesday 11 August 2026. Rising rates thin out the buyer crowd, so lenders compete harder for the borrowers still moving, and that competition shows up as sharp headline rates, honeymoon discounts and cashbacks. More sharp-looking offers means more small print. Fewer rivals on auction day is your advantage this cycle; reading the pricing properly is how you keep it.
What is a comparison rate, exactly?
One number that folds the interest rate and most compulsory fees into a single annual rate. Application fees, settlement fees, monthly account-keeping fees, annual package fees: rolled in. Lenders don't publish it by choice. The National Credit Code requires a comparison rate beside any advertised rate, calculated on a standardised $150,000 loan over 25 years, so that each lender is measured with the same ruler.
The gap is the tell. A loan advertised at 5.79% with a 5.81% comparison rate carries almost no fees. A loan advertised at 5.49% with a 6.07% comparison rate is hauling a heavy fee load, an introductory discount that expires, or both. You don't need to know which yet.
Why can the cheaper rate cost you more?
A 5.49% loan can cost more than a 5.79% loan. Not occasionally. Routinely.
Honeymoon pricing is the usual reason. A discounted rate runs for the first year or two, then reverts to something higher, and the comparison rate captures that revert while the headline number doesn't. Annual package fees do quieter damage: $395 a year reads as trivial next to a six-figure loan, yet over 30 years that is $11,850 walking out the door. Lender pricing is built around inertia; the sharpest discounts chase new borrowers, and revert rates do the earning once people stop watching.
Cashbacks work the same corner of your attention. A $3,000 payment appears nowhere in the comparison rate, and as at July 2026 roughly ten lenders offer between $1,000 and $4,000 to switchers. Our look at cashback offers tests whether the cash outlasts the pricing. Fixed loans add one more wrinkle: the comparison rate assumes you roll onto the revert variable rate when the fixed term ends, so it says as much about year four as year one. Weighing that trade-off is a fixed vs variable decision.
Where the comparison rate goes blind
The legal formula assumes a $150,000 loan over 25 years. Hardly anyone borrows that. Against a national median dwelling value of $937,722 on Cotality's June 2026 index, most new loans run several times that figure, and size changes the answer: fees weigh heavily on a small loan and lightly on a large one, so the comparison rate can over-punish a fee-carrying loan that would suit a bigger borrower well.
It is silent on value, too. Offset accounts, redraw and split facilities can be worth thousands a year to the right borrower and add nothing to the number; our guide to home loan features puts dollar figures on them. LMI sits outside it too, charged separately at settlement; LMI explained is the companion read for smaller deposits.
Two loans, one $650,000 decision
Angela is refinancing a $650,000 loan over 30 years on a townhouse in Kedron, in Brisbane's north. Two offers make her shortlist. Rates are illustrative only, as at July 2026.
| Loan A | Loan B | |
|---|---|---|
| Advertised rate | 5.54% p.a. | 5.69% p.a. |
| Comparison rate ($150,000 over 25 years) | 5.96% p.a. | 5.74% p.a. |
| Fees | $600 upfront + $395 annual package | $250 upfront, no ongoing fees |
| Monthly repayment on $650,000 | $3,707 | $3,769 |
The comparison rate points at Loan B. At Angela's loan size, Loan A wins: the lower rate saves about $744 a year in repayments, the package fee costs $395, and she finishes roughly $350 a year ahead, north of $10,000 across the life of the loan. The comparison rate wasn't wrong. It was answering a $150,000 question while she was asking a $650,000 one.
Based on typical scenarios. Individual outcomes vary.
Which number should you trust?
Both, in the right order. Screen with the comparison rate: a wide gap between advertised and comparison means fees or an expiring discount, and you want to know which before you go further. Then run the finalists at your own loan size and term, because that is the number you will live with for decades.
Your current rate deserves the same scrutiny as the ads. If it has drifted above what lenders offer new borrowers, Wity Negotiate is the free way to test it: the platform scans 45+ lenders, shows the gap between your rate and the market, and hands you the evidence rates plus a word-for-word script. You ring your own lender's retention line; the Wity team can coach you first. If the bank won't move, that same evidence becomes a refinance in one tap. Still deciding whether switching stacks up? Should I refinance? walks through it.
Want to see where your own loan stands? Start the Wity questionnaire → — free, no credit check, two minutes.