Attractive introductory rates could see borrowers $33,573 worse-off within five years and $140,816 within 30, new data from comparison service RateCity has revealed.
“Don’t get hoodwinked by a honeymoon rate. You’re almost always going to be better off with a low ongoing variable rate with no hidden twists,” RateCity spokeswoman Sally Tindall said.
“They might give you a bit of breathing room in the first year, but more often than not they are short-sighted quick fixes.”
Across the RateCity database, one of the lowest honeymoon rates is 3.65 per cent. However, this jumps to 5.17 per cent within a year.

That’s a 1.52 percentage point increase, or the equivalent of more than six official cash rate hikes in one go.
However, some revert rates, like the Bank of Queensland’s, soar as high as 5.70 per cent.
“The day after the honeymoon is over, reality sinks in and for many people their loan becomes a very costly financial headache,” Ms Tindall warned.
“One way to be on the lookout for honeymoon rates is to check the comparison rate. If it’s significantly higher than the advertised rate, there’s likely to be costly catch.”
This is what the future could look like
|
Company |
Product |
Intro rate |
Revert rate |
Rate hike |
Initial mthly repay |
New mthly repayments |
|
Extra paid after 5 yrs |
Extra paid after 30 yrs |
|
Community First Credit Union |
Honeymoon home loan |
3.65% |
5.17% |
1.52% |
$1,372 |
$1,634 |
Compared to low ongoing rate @ 3.49% |
$23,998 |
$103,051 |
|
Arab Bank Australia |
HeadStart Home Loan |
4.15% |
5.49% |
1.34% |
$1,458 |
$1,695 |
Compared to low ongoing rate @ 3.49% |
$29,348 |
$125,214 |
|
RACQ Bank |
Mortgage Breaker |
3.72% |
4.99% |
1.27% |
$1,384 |
$1,603 |
Compared to low ongoing rate @ 3.49% |
$22,111 |
$92,105 |
|
Hume Bank |
Introductory Rate |
3.99% |
5.10% |
1.11% |
$1,431 |
$1,624 |
Compared to low ongoing rate @ 3.49% |
$24,258 |
$99,987 |
|
Bank of Queensland |
First Start Home Loan |
4.70% |
5.70% |
1.00% |
$1,556 |
$1,737 |
Compared to low ongoing rate @ 3.49% |
$33,573 |
$140,816 |
These figures are based on a $300,000 home loan, variable owner-occupier loans and principle and interest contracts. The rates quoted are for 12 months.