Refinancing activity is at ultra-high levels right now as owner-occupiers and investors alike try to find home loans with lower interest rates as the Reserve Bank continues to raise the cash rate.
Borrowers refinanced a record $19.5 billion of loans in November, the most recent month for which we have data, according to the Reserve Bank of Australia.
By way of comparison, that was 20.4% higher than the year before and 88.2% higher than two years before.
What Does the Future Hold for Refinancing?
The Reserve Bank has hinted that at least one more rate rise is coming. In December, it said it wanted to “return inflation to the 2-3% target range over time” (it’s currently 7.3%) and would “do what is necessary to achieve that outcome” – i.e. further increase the cash rate.
What Does This Mean for Your Refinancing Options?
If it’s been a while since you took out your home loan, now would be a good time to think about refinancing. However, with the Reserve Bank considering further rises in the cash rate, there may be some uncertainty about how best to go about it.
This is where a finance broker can help. At Peel Finance Brokers, we have the knowledge and experience to help you find the right loan for your needs, whether you’re a first-time home owner or a seasoned investor.
What are the Benefits of Refinancing?
The main benefit of refinancing is that it can help you secure a lower interest rate for your loan. This could save you thousands of dollars in interest payments over the life of the loan.
It can also allow you to switch to a loan with a more suitable repayment structure, such as a variable rate or fixed rate loan. You may also want to switch to a loan with features such as an offset account or a redraw facility.
What to Consider When Refinancing
When refinancing your home loan, there are a few things to consider. One of the most important is the cost associated with switching lenders. The costs can vary from lender to lender, so it’s important to shop around to find the best deal.
It’s also important to consider the fees associated with closing your existing loan and opening a new one. This includes exit fees, discharge fees and application fees. You also need to factor in any break costs that may be incurred if you’re switching from a fixed-rate loan to a variable-rate loan.
Finally, you should also consider the impact of switching lenders on any loyalty discounts or special offers you may currently enjoy.
If you’re interested in assessing your personal circumstances to determine if refinancing is the right option for you, get in touch with Peel Finance Brokers today. We can help you find the right loan for your needs and save you thousands of dollars in interest payments. Contact us today to get started.
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- Expectations for Inflation in 2023
- How to Recession-Proof Your Business
Dip. of Management (Deacon University)
Dip. of Finance/Mortgage Broking Mgt.
Assoc. Cert. of Business (Real Estate)
Assoc. of Mort. Ind. Assoc. of Aust. (AMIAA)
Terry Boag is the founder and CEO of Peel Finance Brokers and has been providing professional and loyal service to the Mandurah and southwest area for 25 years. With a long history of financial experience, Terry is reliable and dedicated to his clients, always ensuring the highest customer service and delivering strong lender relationships.