Health Check Gerry's Blog

August 20, 2013
Gerry Grant

Cost-cutting homeowners actively looking for ‘cheaper’ loans Around one quarter of Australian mortgage holders consider refinancing  With interest rates now at historically low levels, it is encouraging to note nearly one quarter of Australian mortgage holders are considering refinancing their current loan, with cost the major driver for the decision.  A recent survey of over 1,000 Australian homeowners with a mortgage, undertaken by Mortgage Choice, found 24% of respondents intend to refinance their current home loan. Of these, 36% have had their home loan for four or less years.  Of the reasons given for the desire to refinance, cost was by far the biggest motivator, more than the ability to access additional funds or a preference for fixed or variable rate options.  Of those considering refinancing their current home loan, 45% of respondents said they would do so to switch to a ‘cheaper’ loan, with cheaper defined as a combination of a lower interest rate, fees and charges.  22% of respondents said they were considering refinancing to lower their repayment level, 21% were looking to consolidate their debts and 19% wanted to lower their fees (including redraw, offset account and annual fees).  While cost was clearly top of mind for mortgage holders, some homeowners were looking to refinance to improve their lifestyle. For example, 27% of respondents were considering refinancing to access additional funds either for a renovation or to obtain funds for an investment property purchase or having more money for other reasons such as a holiday.   When refinancing, 62% of respondents said they would consider changing both loan product and lender.  It is very important for existing and new borrowers to investigate a wide range of home loan options and to be mindful that some smaller, perhaps lesser-known lenders, which have qualified for our lender panel, may offer really competitive interest rates, low fees and beneficial features.  Those considering refinancing, more than half (54%) said they would use a mortgage broker to help them through the process.   With such a wide range of loan and lender options available, a great first step for anyone looking to make changes to their home loan situation is to talk to a mortgage broker, like myself. I can help make the decision easier by exploring your needs and assisting you to compare apples with apples.  With interest rates back on the agenda ahead of the Reserve Bank of Australia’s monthly board meeting on 2nd July, savvy mortgage holders will naturally be keeping a keen eye on any movement in the cash rate.  Many economists say there is potential for more variable rate cuts this year, so it is always a good idea to educate yourself on the best loan options for you and to make certain you are still getting a good deal.”  If you want to learn more about your home loan options, call me on 0416 078 089 or email me at gerry.grant@mortgagechoice.com.au

Posted in: Interest rates

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