What determines interest rate?

I recently got approved 3.84% IO fixed for 3 years for 180k Investor loan from CBA (this is the fixed part of a total 320k loan at 80% LVR). I went through a mortgage broker. One of my colleagues said that he has seen better interest rates from CBA. This got me thinking. (Of course, first I asked him if he is talking about IO, if he is talking about 80% LVR etc)

1) What are the factors determining interest rate? I understand that total loan amount and LVR are obvious factors. What else will influence it? Credit score?

2) If I approach the bank directly with the same application (instead of via mortgage broker), will the interest rate offered remain the same? In other words, will the channel through which the application was received by the bank, change the interest rate?

3) Is there any subjective factor in determining the interest rate? Or is it purely numbers based i.e. if 2 people with same income, same loan amount, same LVR etc. apply to the same bank, would they be offered the same interest rate?

Thanks in advance for any replies.

 

Is your colleague a broker or what? 3.84% IO Investment at 80% LVR is bang on what CBA have been offering lately (with discount request required) with a larger loan amount is possible to get slightly cheaper.
To answer your questions;
1) Total lending with that particular lender and LVR are the determining factors, credit score doesn't come into it. (although can be a reason to decline the deal if it's too low)
2) Probably higher if you went direct to bank to be honest, they can match the broker rate though.
3) No subjective factor, two people going for same loan amount LVR and product should get the same rate, although sometimes the bank will leave the rate high unless you push them to reduce it, a good broker will apply for a discount for all clients.

 

Thanks for the response. Nope he is not a mortgage broker. He mentioned something like 3.69% variable IO investment loan from CBA with offset attached. I nearly fell out of my chair hearing that. For the remaining part of my loan, (140k portion), I was offered 4.19% variable IO loan with offset attached (this is with wealth package).

But he is also an experienced investor with 10 properties and has good relationship with lending managers from couple of banks, which is why I didn't just discount whatever he said.

 

Ok, so not entirely impossible but would need to have a fair chunk of lending with CBA for the discount to be that good, not exactly applicable to your situation. Bit like comparing apples to oranges, both are fruit though.

 

1. When is important. Banks appetite changes weekly.
Loan size, io or pi, lvr, products with bank, number of securities, other loans, total lending etc

2. Shouldn't make any difference other than due to the different time the request is made

3. See 1