By Phil Ringuet
Rising interest rates got you feeling a little vulnerable? It might be time to take some control back by refinancing or asking for a rate review. Here’s why we’re seeing refinancing numbers surge across the country.
In just two months we’ve seen the Reserve Bank of Australia (RBA) increase the cash rate from a record-low 0.10% to 0.85%, and it hasn’t taken long for most lenders to pass those rate increases on to customers.
Unfortunately, the RBA has warned that more rate hikes are on the way, which might have left you feeling at your lender’s mercy.
But there are ways you can make yourself feel more in control, including by doing what tens of thousands of mortgage holders around the country did in May: refinancing or asking their current lender for a better rate.
Homeowners are refinancing in droves
According to PEXA’s latest refinancing insights, refinancing increased by more than 20% in May (from April) across each of Australia’s four most populous states.
Here’s a quick breakdown:
NSW: 10,838 refinances. That’s 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
So why the big increase in refinancing?
Lenders now, more than ever, need to attract and retain borrowers.
So just because rates are going up, doesn’t mean you can’t scope out a better deal – especially if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.
If that sounds like you: you’re 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, in NSW, Victoria, Queensland and Western Australia combined, the major banks and their subsidiaries had a net loss of more than 5,000 borrowers to non-major lenders in May, according to PEXA.
Competition is fierce!
Why work with a broker now?
The amount of loans being written by brokers continues to grow.
In fact, brokers are currently writing 70% of all new home loans in the country – the biggest market share ever.
And as you know, brokers are loyal to you, not to any particular lender.
That means that if we think you can get a better deal elsewhere, we’ll encourage and help you to do so – not hope that you’ll stay put on your current rate.
And even if you don’t want to refinance with another lender, there’s always the option of asking your current bank to review your rate (and indicating that you’re prepared to refinance if they don’t come to the table).