Why everyone's doing it
I’m not sure what the collective noun is for refinancers; a review, a revolt, a rave… whatever it is, there are record numbers of them.
We have more time at home to look at those nagging “life admin” tasks and we’re also realising that - in such a strange economic climate - we really don’t need to be donating extra funds to lenders.
Looking at the latest data, refinancing* is on trend. In April, Australian home-owners refinanced to the tune of $12 billion^. This is a huge volume of refinancing activity. Or so we thought. Along came May and $15.1 billion worth of loans were refinanced! That month, for the first time in Australia’s history, the value of refinanced loans was almost as high as the value of loans for property purchases.
In 30 days, 33,712 people refinanced and, interestingly, three-fifths of those refinancers changed lenders. Often I hear clients say that they’d like to stay with their bank or lender, so they want me to see if I can get them a lower rate within an institution that is familiar to them. These days, it seems that old-school loyalty is going the way of the dodo. And for the better. It’s about getting you more money in your pocket, right?
Pandemic-induced uncertainty (for both the broader economy and our own personal financial circumstances) coupled with record low rates, economic stimulus and ferocious competition between lenders for your loan has been a catalyst for borrowers to rethink their current loan.
Cuts to the cash rate to just 25 basis points** in March have now filtered through to home loans, taking mortgage interest rates to record lows. I’ve been reaching out to my clients whose loans are starting to look less attractive and working with them on alternatives.
If you feel like it’s time to look at yours, don’t be a stranger. I’m only a Zoom, call, text message, or email away.
*Disclaimer: Any refinancing/access to home equity is subject to lender imposed terms and conditions including but not limited to loan serviceability, valuations and confirmed capacity to service both any existing and revised lending arrangements. This document has been created by Loan Market Pty Ltd (ABN 89 105 230 019, Australian Credit Licence no. 390222). It provides an overview or summary only and it should not be considered a comprehensive statement on any matter. You should before acting in reliance upon this information seek independent professional lending or taxation advice as appropriate specific to your objectives, financial circumstances or needs. Information included has been sourced from third parties and has not been independently verified. Accordingly, Loan Market Pty Ltd is not in any way responsible for nor provides any warranty express or implied as to its accuracy or relevance.**The current official cash rate as determined by the Reserve Bank of Australia (RBA) is 0.25% as at 4 August 2020. Source^https://www.finder.com.au/press-release-july-2020-record-high-15-billion-in-home-loans-refinanced-in-may