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Home loan refinancing sooner than later

Refinancing sooner than later

By Louisa Sanghera, Director, Zippy Financial

Are you thinking about refinancing? As interest rates rise, so do the hurdles that you need to clear. Here is why you might want to look at refinancing soon to avoid missing out.

When was the last time that you refinanced? If the answer is never or you can’t remember, then there is a good chance you are paying a higher interest rate than you could be due to the “loyalty tax”.

The banks don’t think you are paying attention and as such only offer their lowest rates to new customers in a bid to win them over, as proven by the RBA. A recent RateCity analysis found that customers who stay loyal to their bank could be hit with an extra $5,101 in interest over the next three years alone, based on a $500,00 loan taken out with CBA in 2019. For a $750,000 loan that would be an extra $7,652 in interest and for a $1 million loan that is an extra $10,202 in interest.

This is a big reason why owner-occupier refinancing across the country rose 9.7% in June to a new record high of $12.7 bullion, according to the Australian Bureau of Statistics.

Why is refinancing now so important?

When you refinance, the new lender must assess something called “home loan serviceability.” It is the ability to meet your home loan repayments at an interest rate that is at least 3% above the rate you are being offered.

The big four banks are tipping the RBA’s official cash rate to increase from 1.85% to anywhere between 2.60% (Commbank forecast) to 3.35% (ANZ forecast) by November. That means that as interest rates go up, so too will the hurdle you will need to clear for home loan serviceability when refinancing.

So… the sooner that you refinance, the lower hurdle you will need to clear to ensure you are not stuck with your current rate and lender.

How do you explore your refinancing options?

Simply get in touch today and we will help you get the ball rolling. And even if you don’t want to refinance with another lender, there is always the option of asking your current lender to review your rate, indicating that you are prepared to refinance if they do not come to the table. After all, loyalty should be a two-way street!

If you’d like to find out more about what options are available to you, get in touch. We want to help you through the period ahead as much as possible!

Phone: 1300 855 022

Louisa Sanghera


Zippy Financial

Main image: Deposit Photos


Disclaimer:This article contains information that is general in nature. It does not consider the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether in business, health or financial.