Rate rise or refinance? The choice is yours
Australian's have enjoyed some seriously low home loan rates for a long time, but the winds may finally be changing with recent indications from RBA Governor Philip Lowe hinting that a rate rise may finally be on the way.
So, will you be up for a rate increase or is now the time to join the rush of refinancers and seek out a better deal?
Analysis by Mozo shows a borrower with a loan of $300,000 switching from the current* average variable rate in the Mozo database of 4.35% to the lowest variable rate of 3.39% could save a refinancer $1,896 over 12 months.
Home Loan Comparison Table - rates updated daily
Fixed Rate Home Loan
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- Bank of QueenslandBank of Queensland
Economy Home Loan Discount Rate
Demand for fixed rate loans is also likely to increase as borrowers look for certainty when it comes to their monthly repayments, with a number of competitive fixed rate deals currently on offer.
Potential refinancing savings:
|Current loan type||Rate||New loan type||Rate||Annual Saving|
|Average variable rate||4.35%||Best variable rate Reduce||3.39%||$1,894|
|Average Big 4 variable rate||4.62%||Best variable rate Reduce ||3.39%||$2,445|
|Average variable rate||4.35%||Best fixed rate (3yr)Easy Street|
|Average Big 4 variable rate||4.62%||Best fixed rate (3yr)Easy Street||3.69%||1,095|
|The above rates are based on an 80% LVR loan of $300,000 to owner occupiers over a 25 year term as at 15/10/15. Source: Mozo.com.au|
Mozo’s top refinancing tips
It’s clear there are savings to be had by shopping around on your current home loan rate but remember to follow these rules of thumb when refinancing.
- While it’s tempting to switch to a lower variable rate, research whether the new lender offers consistently low rates
- Weigh up whether your savings by switching will pay for the costs associated with refinancing (e.g discharge fees and any upfront charges) within the first 12 months
- Consider a fixed rate , they’re at all time lows and with rate rises looming, it could be a good time to lock in a consistent low rate
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