Crushed by rising mortgage rates, borrowers find an upside: Refinancing
As interest rates rise, the difference between a good home loan and a bad one is more expensive than ever.
Rising interest rates have hit Australian borrowers hard, prompting a record number to refinance their home loans to reduce their costs.
The latest ABS figures show that over 40,000 borrowers refinanced in June, the latest month for which data is available.
Borrowers collectively refinanced a record $20 billion, which works out to an average loan amount of $494,629.
Everything from groceries, fuel, rent and energy is getting more expensive in 2022. And interest rates are rising too. The Reserve Bank of Australia (RBA) has increased the official cash rate 4 times in 4 months this year, sending home loan rates soaring.
In April 2.00% was a good interest rate for a variable rate owner-occupier home loan. Now it's more like 3.60%. And for investors or borrowers looking to fix, rates can get even higher.
Rising interest rates are both a response to rapid inflation and a source of further pain on already stretched budgets.
But many Australians aren't taking these rate rises lying down. They're going online to compare interest rates and looking for better deals.
Even as interest rates rise, there are still lower-rate offers around. And with everything getting more expensive, getting a lower rate now can save you more than ever.
The average variable rate home loan according to Finder's database is now 4.18%. This takes into account loans from across the market and includes many uncompetitive products.
The lowest rate on Finder is 3.09%*
If you had a $500,000 loan over 30 years at 4.18% your monthly repayments would be $2,439.
If you refinanced to a new 30-year loan term at 3.09% your monthly repayments would drop to $2,132.
This would save you $307 a month or $3,684 a year.
Calculate how a rate rise might affect your loan repayments
* Rates are correct at time of publication only.
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