What is a standard variable rate?

When you’re looking for a home loan, it’s important to understand the different types of interest rates that lenders offer. One that you might hear referred to often is a standard variable rate.

A standard variable rate (SVR) is the interest rate applied to a lender’s standard home loan. It’s a variable interest rate which lenders will typically use as a benchmark to price the other variable rate home loan products they offer. 

A standard variable rate home loan will generally include many of the features the lender has on offer, such as an offset account and redraw facility, but it often comes with a higher interest rate than their more basic products.

All lenders have an SVR, but standard variable rate home loans will tend to differ from lender to lender because there is no set law or regulation to determine the criteria.

If you’re looking for a way to compare products and ensure you’re comparing apples with apples, you could consider reviewing the product’s comparison rate. The comparison rate includes other additional fees and charges such as ongoing monthly or annual fees, and upfront costs such as application or establishment fees that you may incur depending on the loan. This can give you a better idea of the true cost of a loan.

Can a standard variable rate change?

As a variable interest rate, a lender’s SVR will often fluctuate in response to cash rate changes made by the Reserve Bank of Australia (RBA), as well as other influential housing market conditions. 

Rate changes are decided by the individual lender, not across the board. So, if one lender decides to raise or cut their SVR, it doesn’t necessarily mean other lenders will also – or perhaps not to the same extent.

Am I eligible for a standard variable rate?

Something to keep in mind about SVRs is that you may not necessarily be offered this rate when choosing a home loan. The rate you may be eligible for is determined by several factors, including:

• The amount you borrow
• The value of the property
• Your credit history

It will also depend on the features and services you require for your home loan and the package you choose. For instance, some lenders have a basic rate which comes with minimal or basic features that may be better suited to some borrowers than a standard variable home loan package. A basic rate will often be lower than an SVR, but again, other factors will determine the rate you are ultimately offered.

A helpful way to determine what kind of home loan may be best suited to your needs is to use RateCity’s home loan comparison tables. Simply use the filters to select the features that are important to you in order to narrow down the search results to only those products that are relevant. 

You might also like to visit RateCity’s home loan leaderboards to compare the top-rated loans under a variety of categories.

And if you’d like some professional advice or guidance that’s tailored specifically to your circumstances, consider reaching out to a mortgage broker.

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