Thousands of households are refinancing their mortgages. In February alone, $20 billion worth of loans were remortgaged.
With the fixed rate cliff just around the corner, Australians will look for a better deal even more.
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On today’s The Briefing, we speak with Rate City’s Sally Tindall about what to do if you’re looking at refinancing and what traps to avoid.
Ms Tindall says we are going through a refinancing boom. The latest ABS statistics show that almost $20 billion of loans were refinanced in February.
A whole lot of people are still laughing all the way to the bank because they’re on a fixed rate that’s under 2 per cent. Can you believe that if you fixed your home loan for two years with the big four banks in July 2021, that was the peak of fixing,”Ms Tindall said.
She says there will be an almighty shock for people who come off in July this year because they are expected to hit ten rate rises in a row.
Banks typically roll their customers onto the revert rate. That’s a variable rate that’s typically quite a bit higher than what you can get by shopping around,”she added.
Ms Tindall says it is worth refinancing depending on what the rate is. It may not be a good option for people who are on a fixed rate where break fees are involved.
But really, most people are coming from a very low fixed rate, and there wouldn’t likely be many, if any, break fees involved there. So, yes, refinancing is typically worth it.”
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