Refinancing is on the rise, what’s driving the trend?
With interest rates falling this year, more Australians are taking a fresh look at their home loans. In fact, close to 100,000 borrowers refinanced in the June quarter alone, that’s 21% higher than the same time last year. Put simply, more than 1,000 loans are being refinanced every day.
Here in Wollongong and across the Illawarra, many homeowners are reviewing their mortgages to see if they can save money, access equity, or consolidate debts. But what’s driving this refinancing surge – and could it be worth considering for you too?
To reduce interest rates or loan terms
For many borrowers, the primary motivator to refinance is the potential to secure a lower interest rate with another lender.
With three cash rate cuts totalling 0.75% so far this year, lenders are competing hard to win new business. Many are reducing rates or offering cashback incentives, while others are introducing sharper packages to retain customers.
Some borrowers are also choosing to refinance into shorter loan terms. If your income has grown or you’re in a position to pay off your loan sooner, this can significantly reduce the overall interest paid across the life of the loan.
To access equity
Rising property values are another reason refinancing is on the rise. With national home values climbing for eight consecutive months and prices across the Illawarra following suit, many borrowers now have more equity in their homes than they realise.
Refinancing allows you to access this equity, which can be used for renovations, buying an investment property, or even helping kids with education costs.
To access additional loan features
Some borrowers refinance to take advantage of features such as offset accounts or redraw facilities, which help reduce interest while giving you flexibility with repayments.
Others switch between fixed and variable rates, depending on what suits their financial situation. With recent rate cuts, some banks have lowered fixed rates, making them attractive for borrowers who want certainty over their repayments.
To consolidate debt
For those juggling multiple debts, such as a car loan, personal loan, home loan and credit card, refinancing to consolidate debt into one repayment can be worth considering.
Rolling everything into your home loan may mean a lower overall interest rate and simpler management. But it’s not always the right move, as it can also extend repayment terms. It’s important to weigh up the pros and cons with a mortgage broker before deciding.
When refinancing may be worth considering:
You haven’t reviewed your home loan in 2+ years
Your rate hasn’t moved after recent RBA cuts
You want to access equity for renovations or investment
You’d like features such as an offset account or redraw
You’re juggling multiple debts and want one repayment
Like to explore your refinancing options?
Experts expect refinancing activity to remain strong this year. If you’ve been with the same lender for a while, or if it’s been a few years since you reviewed your home loan, now is a great time to see what’s available.
At Haus of Loans, we’ll compare the market for you, explain the pros and cons of each option, and help you secure a home loan that truly suits your needs. Whether you’re in Wollongong, the Illawarra, or beyond, we’re here to make refinancing simple and stress-free.
Get in touch today and let’s explore how refinancing could work for you.