The Reserve Bank of Australia (RBA) has increased the cash rate for the second time this year. Many economists predicted it would be increased in an effort to cool growing inflation, particularly with international uncertainty forecast to impact the Australian economy. The cash rate is currently sitting at 4.10%.
Following the cash rate increase last month, Loan Market saw a record number of refinances – an increase of nearly 7% the week after the announcement. With lenders passing on the rate hike to interest rates, savvy homeowners compared their options through their broker and refinanced to a deal that was better suited to them.
This shows there is value in comparing your home loan as there is plenty of competition among lenders to win your business.
When should I look at refinancing?
There are a number of times where refinancing may be the right option for you. These can include:
- If your interest rate is no longer competitive (including after a cash rate move)
- Your circumstances have changed (such as a pay increase)
- You have more equity in your property and have lowered your loan to value ratio (LVR)
- You want access to different features, including an offset account or redraw facility
- You want to consolidate debt or access equity
How can I get a better interest rate?
If any of the first three points above apply to you, there is a chance you could get a better interest rate. It never hurts to have your broker compare loans to see whether refinancing could save you money.
Ways you may qualify for a better interest rate include:
- You have improved your credit score.
- Your LVR (that is, the amount of your property’s value that the loan covers) has decreased (meaning you have paid down some of the principal).
- Your circumstances have improved, such as moving from a single to dual-income family or a pay rise. Some lenders also offer special deals to some professions, such as doctors.
- You have paid down other debts.
- You find a lower interest rate with another lender.
Loan Market brokers can compare over 60 lenders to see if your home loan is still competitive. They can first negotiate with your existing lender to see if your rate can be lowered, and if not, look to move you to another lender that can offer a better deal.
Find a Loan Market broker near you to get started.
