A RATE THAT’S NOT SO RELEVANT

What is the standard variable rate anyway? If a lender says you’re eligible for a discount on the SVR, don’t assume it’s doing you a special favour. The Productivity Commission found that the SVR seems to be something of a benchmark and not much else. It noted that the advertised SVR “bears no resemblance to the actual interest rates offered to potential borrowers”. The good news is that the vast majority of consumers pays less than the SVR. But there’s a catch. Among existing customers, 72% pay less than the SVR but when it comes to new customers 91% pay below the SVR. This indicates that lenders offer sweeteners to new customers without offering the same perks to existing ones. The key takeout is that it if you’re not happy with your current rate, ask your lender if it can do better or think about taking your business elsewhere.