Now is the perfect time to refinance.
Refinancing your home loan is all the rage – and with good reason. There are savings to be made and it is a good way to prepare for the higher interest rates that lay ahead.
PEXA, the online conveyancing platform, noted refinancing stood at fresh record levels in NSW and Queensland, while Victoria was at its previous record. There are now more than 11,000 refinances lodged monthly with the NSW Land Registry. Victoria is seeing around 11,500 monthly refinances. It is 5000 in Queensland.
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NSW, up 15 per cent, saw the greatest increase compared to the previous financial year, with Queensland up 12 per cent, and Victoria up 3 per cent.
The latest figures from the ABS show the total value of refinanced loans hit $16 billion in June across Australia, up $1.3 billion in May.
The RBA is set to raise rates in the future.
The refinancing has been sought by both owner occupiers and investors fuelled by the low rates. Prior to the pandemic, the non-major lenders were the keenest force in refinancing, but Mike Gill, senior research manager at PEXA, suggests the now lapsed RBA Term Funding Facility saw the big four banks take up the cause with greater enthusiasm.
Of course the big banks are also reacting to the disruption from new entrants, digital home loan lenders who skip much of the complicated paperwork requirements that see inordinate delays.
RateCity.com.au research director, Sally Tindall, suggests the record high in refinancing is prompted by mortgage holders racing to lock in low rates before the inevitable rise.
“Covid was a wake-up call for people to get their finances in order,” she said. “Over a year later and we’ve now hit a new record high, although this time, the surge is more likely to be fuelled by a fear of missing out.”
While the majority of changes to fixed rates in the past two months have been upwards, there are still cuts being made. Earlier this month ME Bank cut rates, while boosting its refinance cashback offer to $3000. The two-year fixed rate was cut by 20 basis points to 1.89 per cent (3.17 per cent per annum comparison rate).
RateCity.com.au home loan database analysis shows 49 lenders have cut at least one variable rate in the past two months, for those who are happy to go variable while refinancing. The majority of variable rate cuts are reserved for new customers, not existing ones, Tindall said.
Check what other lenders are offering. Picture: iStock
“Unless you specifically ask,” she said. “Before you call, check what rate your bank is giving new customers for the same home loan, but also find out what other lenders have on offer.
“A lot of people think a handful of basis points won’t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years.” she said.
Of course advice given here is general in nature and is not intended to influence readers’ decisions about financial products. They should seek their own professional advice before making financial decisions.
The post Why now is the perfect time to refinance your home loan appeared first on realestate.com.au.
There are plenty of savings to be had if you choose to refinance, with now the perfect time to prepare for higher interest rates that lay ahead.
The post Why now is the perfect time to refinance your home loan appeared first on realestate.com.au.