# Interest rates - Dummies definition



## tronic72 (2 December 2008)

Hi,

At the risk of looking foolish. Can someone please explain the difference betweem the "official cash rate" which is 4.5%

And what the rest of us are paying. 

I've just done quick search and the big banks are currently:
ANZ - 7.74% (Comparision rate 7.84%)
NBA - 7.53% (Comparision rate 7.58%)
WBA - 7.71% (Comparision rate 7.92%)

We are currently locked in for another 2 years at 7.79%.

Thanks, T


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## Illuminated one (2 December 2008)

Wow, anything above seven is a ripoff, i go to http://mozo.com.au/ and the rates there are at 6.02% at the moment and declining.


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## Lammii (7 December 2008)

the official cash rate is the rate the reserve bank sets to reflect inflation.

regular banks set their interest rates around this value.
when the cash rate changes banks will adjust soon after


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## Glen48 (7 December 2008)

I would not be worried about rate when you house price is declining. Sell and start again later.


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## sam76 (7 December 2008)

I have a dumb question to add.

Having never bought a house I would like to know what a 'comparison rate' is?


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## shaunQ (7 December 2008)

sam76 said:


> Having never bought a house I would like to know what a 'comparison rate' is?




All lenders must disclose a benchmark comparison rate in their advertising of home loans and personal loans since July 2003. The comparison rate is designed to reflect the total annual cost to a borrower of a loan. It wraps up interest payments and fees and expresses all these costs in one rate.


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