Advertised rate or comparison rate? Which number to look at when rates are rising

With variable rates up again this month, plenty of Australians are using the weekend to compare home loans. Every advertised rate you see comes with a second number beside it: the comparison rate. The two numbers answer different questions. Here’s what each one tells you, why the comparison rate can point the wrong way on a typical loan size, and what to check before you compare or refinance.

Why this matters right now

The Reserve Bank lifted the cash rate by 0.25 percentage points to 4.60% on 29 September. By 9 October, Canstar reported that more than 40 lenders on its rate tracker had passed the rise on, including the big four, Bendigo, ING, AMP, Bankwest, St George and Suncorp. ANZ also lifted its fixed rates by up to 0.25 points that day.

If you want to know what the rise does to your repayment, we covered that in our 9 October article, Big four variable rates rise today. This piece is about something different: how to read the rates you’ll see when you shop around.

The advertised rate: what you actually pay interest at

The advertised rate is the annual interest rate the lender charges on your balance. It’s the number your minimum repayment is calculated from.

Two things to keep in mind. First, an advertised rate is often a “from” rate. The rate you qualify for can depend on your loan-to-value ratio (LVR), whether you’re an owner-occupier or investor, and whether you pay principal and interest or interest only.

Second, the rate you’re offered may not be the advertised one. Lenders often price loans individually. CommBank’s rates page on 10 October, for example, offers at least 0.10% p.a. off the advertised rate on eligible new Simple and Standard Variable Rate loans over $150,000 applied for online (eligibility and conditions apply). If you already have a loan, you’re on your own rate, not today’s advertised one, so check your actual rate before you compare anything.

The comparison rate: interest plus most fees, in one number

ASIC’s Moneysmart describes a comparison rate as “a rate that helps you work out the true cost of a loan. It includes the interest rate, and most fees and charges relating to a loan, reduced to a single percentage figure.”

According to Canstar, a home loan comparison rate is based on:

• the advertised interest rate
• upfront fees, such as application, settlement and valuation fees
• ongoing fees, such as monthly account-keeping fees or annual package fees.

Canstar notes that lenders in Australia are legally required to display a comparison rate next to their advertised rate. Under the national credit rules, the comparison rate has to be calculated on a set example for each type of loan. For home loans, that example is a $150,000 loan over 25 years. That’s why you’ll see fine print like CommBank’s: “Comparison rate calculated on a $150,000 secured loan over a 25-year term.”

Every advertised comparison rate also has to come with a warning. The long version, set out in regulation 99 of the National Consumer Credit Protection Regulations 2010, is one of the clearest explanations you’ll find:

“This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.”

Shorter ads use a condensed version: the comparison rate “is true only for the examples given and may not include all fees and charges.”

Same rate, same repayment, different comparison rate

Canstar’s home loan table on 10 October 2026 defaulted to a scenario of refinancing a $650,000 owner-occupied variable loan, paying principal and interest. Here are four listings from it, described by loan type rather than brand. They’re examples only, not recommendations. Some were promoted listings, and rates change daily. You can see the live table on Canstar’s home loans page.

Look at the first two rows. Both loans are at 6.19%, and Canstar shows the same $3,977 monthly repayment for each. Yet their comparison rates are 0.26 points apart, because one carries a $300 annual fee (and comes with an offset account). The third row shows the reverse: the lowest advertised rate of the four, but a comparison rate above the basic loan’s, because of a $10 monthly fee.

A comparison rate can even sit below the headline rate. One online lender’s variable loan, listed with a discount that grows over time, showed an advertised rate of 5.89% and a comparison rate of 5.80%, most likely because the 25-year calculation counts the scheduled rate reductions.

None of this tells you which loan is better for you. It tells you where to look next: the fees, and whether you’d actually use what they pay for.

Why the $150,000 example can mislead on a typical loan

Fees are a fixed dollar amount, so how much they matter depends on the size of the loan. As a rough illustration (simple arithmetic, not a sourced figure):

• A $300 annual fee is about 0.20% a year of a $150,000 loan.
• On a $650,000 loan, the same fee is under 0.05% a year.

So on a loan well above $150,000, the comparison rate can overstate how much a fee matters, and the advertised rate matters more. On a loan below $150,000, fees weigh more heavily than the comparison rate suggests. Your term matters too: the calculation assumes 25 years, and many loans run for 30.

Here’s a hypothetical example on a $650,000 loan over 30 years. Loan A is 6.19% with a $300 annual fee, or $25 a month. Loan B is 6.29% with no fees. Loan B’s repayment is about $42 a month higher (roughly $4,019 versus $3,977). Add Loan A’s $25 fee and Loan A still comes out around $17 a month cheaper in the early years, even though its comparison rate would be the higher of the two. Run the same two loans on $150,000 and the result flips: the rate gap is worth only about $10 a month, so the no-fee loan comes out ahead. These are rough early-years figures that leave out upfront fees, but they show why it pays to work it out on your own numbers.

What the comparison rate leaves out

• Redraw fees and early repayment fees. The official warning names both.
• Fixed-rate break costs if you repay or switch a fixed loan early.
• Fee waivers and other cost savings. Also named in the warning. A waived fee can make a loan cheaper than its comparison rate suggests.
• Cashback offers. A one-off payment to you won’t show up in either rate. Weigh it against the rate over the years you expect to keep the loan.
• Negotiated or personalised discounts. The comparison rate is built on the advertised rate, not the one you might be offered.
• The cost of leaving your current loan, such as a discharge fee or break costs, which sit with your old loan rather than the new one.

What to check before you compare or refinance

• Start with your actual rate. Check it in your banking app. CommBank customers, for example, can see their new rate in the app and NetBank from today, Saturday 10 October.
• Compare like with like. Same loan type (variable with variable), same LVR band, owner-occupier or investor, principal and interest or interest only.
• Use the advertised rate for repayments and the comparison rate as a quick fee check. Then ask for the fees in dollars: upfront, ongoing and on exit.
• Work it out on your own loan size and term, not the $150,000 example.
• Ask whether you’d use the features you’re paying for. An offset account or package extras are only worth the fee if they save you more than they cost.
• Ask about the costs the comparison rate leaves out, especially break costs and discharge fees if you’re refinancing after this month’s rise.

Related reading

For Canstar’s repayment estimates by loan size, see our 9 October article, Big four variable rates rise today. Weighing up a fixed rate? Read why fixed rates are rising faster than the cash rate. For when the rise reaches each lender, see our start-date timeline.

Sources: ASIC Moneysmart, glossary, “comparison rate” (last updated 23 August 2019). National Consumer Credit Protection Regulations 2010, regulation 99 (comparison rate warnings) and the designated $150,000 / 25-year example for home loans. Canstar, home loan comparison table and “What is a comparison rate and why does it matter?”, 10 October 2026 ($650,000 refinance scenario; listings as shown on the day). Commonwealth Bank, home loan interest rates page, 10 October 2026 (comparison rate basis and warning; online discount offer) and “Home loan rates announcement”, 30 September 2026. Reserve Bank of Australia, media release 2026-27, 29 September 2026. Canstar, “Millions of borrowers slugged with higher rates from today as ANZ also hikes fixed”, 9 October 2026. Loan Worth calculations for the illustrative examples.

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