It is not that long ago homeowners were paying 17% on a home loan. It was a very different time to what we face now.
The RBA cash rate is at record lows, and the Reserve Bank has stated it cannot and will not drop it below the current 0.25%. We have now also seen the introduction of Quantitative Easing (QE) in Australia, sending Fixed Rate loans down below 2.20%
Small wonder refinancing has surged to over 70% of loan applications!
For many in an older loan there can be substantial benefit in refinancing, depending on current circumstances. Is now the ideal time for you to review your loan?
Things you should consider:
Fixed rates are very low. There are better reasons to fix now than ever before, but it is not appropriate for everyone, consult with your broker first
Benefit to refinance is proportional to debt: If your balance owed to the bank is low there will be little to be gained from the costs of refinancing
If you are suffering loss of income due to Covid-19 you may need to delay refinancing, however lower rates may be achievable without moving banks, call your broker for advice
Your property may not be valued at what you know it is worth - we have recently seen some property valuers being extremely conservative
Some lenders are experiencing very slow processing times, another Covid-19 side effect. If turn-around time is a priority you must let your broker know as part of lender selection
Remember bank staff are not licensed credit advisors, they are product provider facilitators. They are very good at their job; you just have to note what their job is. To seek credit advice, call your broker, remember there is no fee for the ongoing credit advice offered. If you do not have a broker and need one call us!