August 31, 2020
In the past 14 months, the Reserve Bank of Australia (RBA) has made five cash rate cuts which have decreased some home loan interest rates across the board and yet only a fraction of Australian households have taken up the opportunity to refinance their mortgage.
According to the Australian Bureau of Statistics (ABS) and the Australian Prudential Regulation Authority (APRA), the lending indicators data from June 2020 depicted that 321,364 mortgage holders – or 6.2% – had refinanced their loan in the 12 months to June 2020.
The data shows that most Australians, an approximation of 4.6 million households did not refinance in that period and may potentially be missing out on saving thousands of dollars.
Consider revising your rate today, refinancing could help you secure a more competitive interest rate! Contact one of our mortgage brokers to compare your options and find a deal that suits you.
The ABS data from the lender statistics in May 2020, illustrated a different outcome revealing 33,712 Australians refinanced in May, up 30% from April 2020. This data is conflicting to the 6.2% increase in June 2020.
There is still plenty of opportunity to refinance if you are in the position to do so. In the last six months we have seen interest rates fall to record lows, it’s almost as if home loans are on sale, which does not happen very often.
Refinancing may not be for everyone, those who have suffered a significant income reduction or job loss in recent months may find it difficult to refinance, given that borrowers will need to meet the same kind of financial checks required of taking out a new loan.
However, customers that are locked into fixed rate offers could face hefty break fees by refinancing which is something they need to weigh up the costs of breaking that agreement.
Consolidate your short-term debts into your home loan when you refinance. Our eChoice broker can help organise your refinancing application.
According to the Mozo database, in the past 12 months the average variable rate has fallen from 3.94% to 3.38% and there have been increasing decline
s in the fixed rate category.
When your home loan interest rate is no longer competitive to other lenders, it might be time to switch up. Interest is the single biggest cost on a home loan, so with the fluctuating market currently, the smallest difference in the interest rate can make a significant impact to a borrower’s total repayments over time.
Refinancing your home loan is beneficial for the customer in the long run. Even though the immediate expense of breaking contract fees and new lender fees will be a lump sum amount, the amount you will save over the life of your home loan will offset the initial expense.
Depending on your property value, you may be looking to refinance to access your usable equity for renovations or purchasing an investment property. Contact us today and we’ll find you a competitive mortgage rate.
Related: Home Refinancing Hits Record Highs
Many refinances are conducted to reduce the interest rate on an existing home loan and a lower rate could help you pay off your mortgage sooner due to saving on repayments. Aim to refinance for a shorter period some first-time refinancers may switch their home loan to a longer loan term that could reduce your monthly repayments but increase the amount of interest you pay over the life of the loan.
One of the biggest benefits of refinancing is paying off your loan faster and reducing the amount of repayments. The quicker you pay off your mortgage – the less interest you pay overall, which potentially saves you thousands.
Get in touch to work out what features of your current loan you want to keep and compare the interest rates on similar loans. If you find a more competitive rate elsewhere, ask your current lender to match it or offer you an alternative.
Related: How to pay off your home loan sooner
Words by Ece Demir
Get better features for yourself, save interest with an offset account, make extra repayments to get ahead and redraw them if you need to. With access to 100s of mortgage products from over 25 lenders, eChoice has the resources to get YOU the right home loan deal.
Written by Refinancing.com.au
Refinancing.com.au is an end-to-end service that helps people refinance their home loan. We empower you to search for your home loan, and choose the process that suits you.
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