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How is the RateTraker Rating Calculated?

Sherlok RateTraker provides brokers with a reliable way to assess the competitiveness of their clients' home loan rates. The interest rate rating helps brokers identify when it’s time to re-engage with a client or when a client’s loan may no longer be competitive in the current market.

Overview of the Calculation Process 

At its core, Sherlok RateTraker rating compares your client’s home loan rate against like-for-like loans available in the market. The system uses various data points and algorithms to analyse interest rates, ensuring the comparison is accurate and relevant. Here's a breakdown of how this works: 
  1.  Loan Type Matching:
    RateTraker begins by categorising your client’s loan. It considers specific features of the loan, such as fixed vs variable rates, loan term, loan amount, and purpose (e.g., owner-occupied vs investment). By narrowing the comparison to similar loan types, RateTraker ensures that the ratings are fair and reflective of the client's actual options. 
  2. Market Benchmarking:
    Once the loan type is defined, RateTraker evaluates current market data. This includes rates from a range of lenders and loan products, ensuring a comprehensive comparison. The system pulls up-to-date data from banks and financial institutions, making the ratings a reflection of what’s currently available in the market.
  3. Rate Spread Analysis:
    The tool calculates the difference between your client’s current rate and the rates available on comparable loans. The greater the spread between your client’s rate and the average rate of similar loans, the more likely it is that the client’s rate is uncompetitive. 
  4. Weighting by Loan Features:
    RateTraker also factors in key features of the loan, such as offset accounts, redraw facilities, and fees. This ensures that loans with additional benefits aren’t penalised if they come with slightly higher interest rates. The rating aims to provide a holistic view, considering not just the rate but the total package. 

The Rating Scale 

The rating scale gives brokers a clear indication of how competitive a client’s rate is: 
  • Highly Competitive: Your client’s rate is among the best available in the market for their loan type. No immediate action needed.
  • Moderately Competitive: Your client’s rate is still competitive, but there may be better options to explore. Consider monitoring for rate changes.
  • Uncompetitive: Your client’s rate is higher than most comparable loans. It’s time to engage with your client and recommend a review of their current rate or lender.  

⚠️ Limitations: It's important to note that while RateTraker provides valuable insights, there are limitations to consider. Currently, we cannot accurately rate Self-Managed Super Fund (SMSF), Business, Land, Construction, and other specialised loan types. This means that for these loan categories, the ratings may not fully reflect the competitive landscape, and brokers should approach such assessments with caution. 

Why Use Sherlok’s RateTraker? 

In today’s fast-paced lending landscape, staying ahead of your clients' loan rates is crucial. Sherlok’s RateTraker offers a seamless, data-driven solution that empowers brokers to monitor and manage their clients’ loan health effectively. With advanced AI-powered churn predictions and real-time market insights, you can proactively assist your clients in avoiding unnecessary costs. 
 
RateTraker enables your clients to effortlessly track their current loan health and initiate a review directly with you. This feature allows brokers to gain a comprehensive view of all client loans, helping you identify potential opportunities for repricing or refinancing with new lenders before clients even realise a change is needed. 
 
Understanding the detailed rating methodology is essential for instilling confidence in your clients. With this knowledge, you can clearly articulate why a rate review is in their best interest, positioning yourself as a trusted advisor.