And it’s your bad luck you seem to have encountered the worst application of it … twice. Yes the headline rate is designed to entice you. This is, of course, a common commercial tactic, and pricing could even be what’s called loss-leading, where the vendor at first expects to lose money. Loading Once you’re in, you’re typically not treated nearly so well – existing customers are often used to fund discounts to attract new ones. Think your electricity, insurance and, yes, sometimes mortgage. You may know lots of smaller lenders have increased variable rates recently, as it gets more expensive to borrow money in wholesale markets, and the majors are expected to follow suit soon (ANZ’s ‘cut’ was extremely limited).

There’ll be quite the kerfuffle when that happens – it’s big news because these increases usually apply to existing and new loans. And that’s where the non-banks get a bit sneaky. Unless they hike their headline look-how-cheap-we-are –rates, the moves will fly under the radar of the rate comparison houses. As Peter Marshall, product data and compliance manage at Mozo, says: “It’s a pretty common practice and it’s really hard for us to have visibility of because we only get told what they want the public to know.” But there’s also some legitimacy to it. “Non-bank lenders obtain a bucket of funds at a particular price and everyone within that bucket has to move with it. They have to go to the market to get new funding and the price could have changed,” Marshall says. For this reason, discount lenders will often have multiple tranches of existing customers on different rates – the interest changes with reference to whatever the seductive starting point.