Time to Refinance Loan
There’s been a lot of talk about interest rates and lending in Australia over the past 18 months. The Reserve Bank of Australia (RBA) has made history with their reductions to the official cash rate, property prices in South East Queensland seem to be skyrocketing and lenders are scrambling to keep up with an influx of borrowers spurred on by attractive government grants. With everything that’s been going on in the world of finance, you may be wondering: is this is a good time to refinance?
How has COVID-19 Impacted Lending in Australia?
COVID-19 has wreaked a lot of havoc in the past year and a half. But, somewhat surprisingly, it has also led to some positive outcomes for borrowers. As the government and the RBA attempted to jump-start the economy, we’ve seen generous government grants, the official cash rate at a historic low and interest rates at levels not seen in many years.
At the same time, South East Queensland has seen an influx of interstate migration as southerners head north in search of warmer weather and fewer lockdowns. This added demand has helped to boost property prices in and around Brisbane and the Gold Coast. In Brisbane, the average house price is now $738,000 after property prices experienced an increase of 4.7% in 2020. With buyer demand climbing and interest rates falling, Brisbane homeowners are now in a unique position. With the added equity in their home, they can now potentially secure a great refinance deal.
Great Refinance Deals Now Available as Lenders Fight for Business
Australians started to refinance their home loans in record numbers during 2020. In fact, the value of refinanced home loans increased by 26% in the month of May alone. This has put a lot of pressure on lenders, who suddenly find themselves having to fight to stay competitive. They’ve done this by slashing interest rates, almost across the board, with rate reductions of 1-2% compared to just a year ago. Some lenders are now offering home loans with interest rates as low as 1.99%.
To put that in perspective, if you had a $400,000 loan with a 30-year term and an interest rate of 3.79%, your monthly repayments would be around $1,862. Refinancing to a comparable home loan with an interest rate of 1.99% would save you $385 per month. That’s a saving of $4,620 in the first year alone!
Lenders are also offering cashback deals as high as $3,000 in an effort to secure the business of refinancing homeowners. However, when deciding whether or not to refinance, it’s important to evaluate your current circumstances, what you hope to achieve from refinancing and how complete loan products will compare (including features, interest rates and fees).
What to Look for When Refinancing Your Home Loan
If you’re considering refinancing your home loan, then the best thing to do is talk to an experienced mortgage broker Brisbane. The team at Borro can assess your circumstances, compare available refinance deals and help to ascertain whether you could benefit from refinancing your home loan. We can discuss your mortgage goals and help you to find a home loan that offers the right features at the best possible rate. And if it turns out you already have a great deal (with no real benefits to be gained by refinancing), then we’ll let you know. There’s nothing to lose and potentially a lot to gain.