Home loan resources

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.

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 rate4.35%Best fixed rate (3yr)Easy Street

3.69%

$543
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

Find great home loan deals

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