Lenders
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Comparison Rates
The comparison rate (CCR) legislation came into effect July 1, 2003. The new legislation is aimed at giving borrowers a percentage figure whereby they are able to compare one home loan to another.
The following formula enables the CCR to be calculated.
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This formula factors in the interest rate, including any introductory rates, ascertainable lender fees, the loan amount, term and repayment frequency to determine a single percentage figure.
The legislators want to give consumers a simple tool which can be used to compare one loan against another, however many experts have reserved their judgement as to how effective the new comparison rate will be in achieving this aim.