RBA Governor Philip Lowe last week fronted the House Economics Committee, where he urged Australians to refinance their mortgages to save on repayments.
“There are some good deals out there and people should hunt them down and take them”, Lowe said.
“There is competition for new borrowers and there is this discounting and again, people switching. I encourage people to do it”.
The RBA’s record interest rate hikes have already driven a boom in mortgage refinancing activity as households seek to mitigate the impact on their budgets:
The RBA’s latest 0.25% hike has lifted the indicator discount variable mortgage rate to 6.70%, up from 3.45% in April 2022 prior to the RBA’s first rate hike:
A household carrying a $500,000 variable rate mortgage at this indicator rate now faces an increase in repayments of 45% from their pre-tightening level, adding around $1,000 per month in mortgage repayments:
These repayments will obviously increase further given the RBA has said that it plans to hikes rates several more times over coming months.
Recent KPMG forecasts also showed there are around 800,000 fixed rate borrowers that will reset to variable rates this year. And a borrower with an average mortgage of $600,000 will face a $16,500 increase in their annual repayments once this switching occurs, according to KPMG.
With this background in mind, it is worth reminding readers that MacroBusiness has partnered with Compare n Save to launch a new home loan comparison service.
This service helps borrowers compare hundreds of loans to potentially save thousands of dollars in mortgage repayments. And when you are ready to proceed, the team at Compare n Save will manage the entire application process for you.
Try the Compare n Save comparison service for yourself. It takes less than a minute.
Compare 100s of loans in seconds, hassle free…..
and when you’re ready to apply, we’ll manage the process for you.
I Want To Refinance
I Need A Loan
For example, if you are looking for a better deal on your mortgage, simply hit the “I Want To Refinance” button, enter the amount you wish to borrow and the interest rate that you are currently paying.
Then the Compare n Save tool will show you in simple terms how much you could save by refinancing, alongside loan options.
View the available loans on offer and if you want to proceed with an application, simply hit the Enquire button, fill out your contact details and the team at Compare n Save will call you back to get the process moving. It’s as simple as that.
As an example, consider a borrower seeking to refinance a $500,000 loan on a home valued at $700,000 and currently paying the RBA’s indicator discount variable mortgage rate of 6.45%. They could save $572 per month by refinancing to the lowest rate on offer:
The Compare n Save tool also lists hundreds of loans that a borrower can compare, starting from cheapest to more expensive.
If you proceed with a loan through Compare n Save, MB receives a cut of the commission so you will be aiding the site as well.
The RBA’s record interest rate hikes are unfortunate. But at least you can lessen the impact by ensuring you are paying the lowest possible mortgage rate.
