By Louisa Sanghera, Director, Zippy Financial
Has rising interest rates got you feeling a bit vulnerable? It may be time to take some control back by refinancing or asking for a rate review. Why are we seeing refinancing numbers surge across the country?
In just a couple of months we have seen the Reserve Bank of Australia (RBA) increase the cash rate from a record low of 0.10% to 0.85% and it has not taken long for most lenders to pass those rate increases onto customers. Unfortunately, the RBA has warned us that more rate hikes are on the way.
There are ways you can make yourself feel more in control, including by doing what tens of thousands of mortgage holders around the country have done – refinancing or asking their current lender for a better rate.
Homeowners are refinancing in droves
According to PEXA’s largest refinancing insights, refinancing increased by more than 20% in May (from April) across each of Australia’s most populous states.
Here is a breakdown:
NSW: 10,823 refinances – May up 20.8% on April, and up 15.6% year on year.
VIC: 11,500 refinances – May up 26.7% on April, and up 23.3% year on year.
QLD: 6,699 refinances – May up 21.8% on April, and up 49.6% year on year.
WA: 3,244 refinances – May up 25% on April, and up 46.1% year on year.
Why the big increase in refinancing?
Lenders now, more than ever, need to attract and retain borrowers.
Just because rates are going up, does not mean you can’t scope out a better deal, especially if you have a decent amount of equity and strong track record of meeting your mortgage repayments. If that sounds like you, then you are a good customer, and lenders want good customers.
The other big reason for the recent surge in refinancing is that smaller lenders are stealing more and more borrowers away from the major banks with super-competitive rates.
In fact, according to PEXA, in NSW, VIC, QLD and WA combined, the major banks and their subsidiaries had a net loss of more than 5,000 borrowers to non-major lenders in May.
Competition is fierce!
Why work with a broker now?
The amount of loans being written by brokers continue to grow. Brokers are currently writing 70% of all new home loans in the country – which is the biggest market share ever. And as you know, brokers are loyal to you, not to any lender.
This means, that if we think you can get a better deal elsewhere, we will encourage and help you to do so, not hope that you will stay put on your current rate.
