Homeowners have been battling rising interest rates for over a year and a half now, but a new report reveals the important step some savvy borrowers are taking to rein in higher rates.
It is no secret that refinancing has the potential to slice a big chunk off your monthly loan repayment. According to Canstar, 1 in 10 mortgage holders chased a better deal in 2023 and switched to a new lender to save on their repayments. But what is surprising is that 9 in 10 didn’t. So, what is holding them back?
Some Score a Discount, Others Don’t
To be fair, many homeowners have been on the front foot this year. According to Canstar, 1 in 5 homeowners with a mortgage have negotiated a better rate with their current lender. Having a chat with your bank can be a fuss-free way to save, especially if they come to the party with a rate discount.
A further 14% of homeowners say they have tried to switch to another lender but weren’t able to do so because they didn’t have enough equity or didn’t meet the new lender’s requirements.
That is why it pays to speak to us before talking to a lender. We have in-depth knowledge of different banks’ lending criteria, so we know which lenders are likely to give you the green light for a better deal.
There are too many borrowers wearing higher rates
The thing is, there are plenty of homeowners who have just copped rising rates without acting. As Canstar puts it: “Too many borrowers remain complacent even in the face of rising repayment costs.”
The scary thing is that 49% of Australia’s homeowners with a mortgage don’t intend to change lenders at all. Some believe they have a good interest rate, but as many as 1 in 5 think that refinancing is too hard.
Busting the myths
It is great if you think you are paying a competitive interest rate but the key is to know for sure.
Right now, variable home loan rates are anywhere from 5.69% (very rare) to 9% plus. With that sort of range, there is plenty of scope to save, especially as lenders often make lower rates available to new customers.
There is an easy way to know if you have a good rate – pick up the phone and call us. If you are worried that refinancing is hard work, rest assured that we will do the bulk of the leg work for you. We will sort through hundreds of home loan options to find the loan that is right for your needs. We will also make the paperwork easy and liaise with your old lender and your new bank.
If you are keen to find out if you can do better with your home loan, give us a call and we will help you put your best foot forward going into 2024.
A: Refinancing involves replacing an existing loan with a new one, potentially with better terms or lower interest rates. It can significantly reduce monthly loan repayments, making it a smart financial move for homeowners.
A: According to Canstar, 1 in 10 mortgage holders in 2023 switched to a new lender to save on their repayments. This trend indicates a growing awareness among homeowners about the benefits of refinancing.
A: Despite the advantages, 9 in 10 homeowners haven’t refinanced. This could be due to a lack of awareness, perceived complexity of the process, or satisfaction with current rates.
A: Yes, negotiating a better rate with the current lender is a viable option. Canstar reports that 1 in 5 homeowners successfully negotiated a better rate with their existing lender.
A: Many homeowners are reluctant to change lenders due to contentment with their current rate or the belief that refinancing is too complicated.
A: Homeowners can consult with financial experts or mortgage brokers to evaluate if their current interest rate is competitive and explore refinancing options.
Phone: 1300 855 022
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
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Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
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