Your loan and interest rate

Your loan & interest rate

Interest rates are important when you’re applying for a home loan, but rates aren’t the only factor to consider. When you have the right home loan that has features to suit your situation, you may be able to minimise fees and use your loan’s features to help you own your home sooner.

How interest rates are set

The Reserve Bank of Australia (RBA) sets the official interest rate to maintain a healthy economy, and this is one factor that banks take into account when determining lending rates for home loans, personal loans and credit cards. Learn more about how the RBA affects your interest rates and see the RBA’s Official Interest Rate and historical rates.

The first step is to choose the right home loan

Choosing the lowest interest rate does not always give you the best value. Instead, the right loan depends on your individual needs. For example, our low interest rate home loan, Basic Home Loan, provides excellent rates but has a ‘no frills’ approach for features.

Choosing a home loan with special features like our full interest offset facility or a split loan with both a fixed and variable interest rate component may mean that you pay a slightly higher interest rate, but you could end up saving on interest and owning your home sooner. It’s always worthwhile to compare Home Loan features before you choose your home loan.

Package and save

A good option might be our Advantage Package¹, an all-inclusive package for your home loan, credit card and transaction account. For a low yearly fee (PDF 117KB), you could be eligible to receive interest rate discounts and can save up to thousands in interest and fees.¹ Or you might benefit from a line of credit with a slightly higher interest rate, where you can borrow against your home’s equity to begin investing.

How to compare rates

Comparing interest rates is complicated. Many people use the loan interest rate to compare different loans, however, that’s like comparing apples and oranges. The interest rate alone doesn’t take into account other costs like establishment fees and ongoing fees.

The National Credit Code requires lenders to provide Comparison Rates that factor in the costs of setting up a loan including the interest, loan establishment fee and other ongoing fees. This makes it easier for you to compare the true cost of different loans. When you see our home loan interest rates, you’ll also see a Comparison Rate.