Why now might be the best time to refinance your home loan

Adam Smith 2 August 2017 NEWS

Just because the Reserve Bank didn’t move yesterday is no guarantee lenders won’t.

The RBA yesterday left the official cash rate on hold for the 11th meeting in a row. With a stable cash rate for the last year, one could be forgiven for thinking the home loan market is pretty static.

Nothing could be further from the truth.

Last month, 17 lenders in the finder.com.au database moved on rates. There were rate hikes as high as 0.45% and rate cuts as big as 0.40%. For context, a 40 basis point cut on a $500,000 home loan that was previously at 5.00% would mean more than a $120 reduction in your monthly repayments. Likewise, a 45 basis point hike on the same loan would increase your monthly repayments by nearly $140. Clearly, some of the rate moves happening in the market could make a big difference to your budget.

Why all the movement?

So, why are lenders moving so drastically outside of the RBA, and what can you do to take advantage of it?

Much of the motivation behind lenders’ rate moves in recent months has been the actions of regulators. The Australian Prudential Regulation Authority (APRA), the body that regulates banks in Australia, has been trying to slow down lending to investors. In March, APRA announced it would cap banks’ new interest-only lending at 30%. Interest-only loans have typically been most popular with investors.

For many banks, including some of the big four, interest-only borrowers accounted for up to 40% of their new lending. The moves by APRA have meant that banks need to slow down interest-only lending, and they’ve done that by moving on rates.

How can I benefit?

The good news is that there are upsides to all these rate movements. While lenders are trying to deter interest-only borrowers, they’re also trying to incentivise principal and interest repayments. They’ve done this both by cutting rates and by cutting the fees that would usually be charged to move to a principal and interest loan.

Moreover, because banks know they won’t be able to source as much business from the investor market due to regulatory restrictions, they now have to make their deals for owner-occupiers even more enticing to make up for the loss of investor business.

That means if you’re an owner-occupier, there could be great deals waiting for you in the home loan market. It’s still not uncommon to find rates below 4%, and if you’re paying more than 5% you’re almost certainly paying too much.

You can read our refinancing guide to see how far ahead you could come out by refinancing, or you can compare loans now in the table at the bottom of the page.

What if I’m an investor?

While it’s true that banks are largely deterring investors through rate hikes, there’s still good news: As many banks become less competitive on investor rates, other lenders become more competitive.

This is because of the existence of non-bank lenders. Non-bank lenders are lenders that raise their own funding, rather than relying on deposits. Because they don’t take deposits, they’re not regulated by APRA. And while they are regulated and bound to responsible lending obligations (in this case by the Australian Securities and Investment Commission, or ASIC), they’re not currently bound by the same concrete speed limit for investment lending.

Non-banks have historically responded to competitive gaps in the marketplace by filling those gaps with sharp deals. This time should be no different, and investors may find some great rates with non-bank lenders.

Likewise, even some institutions regulated by APRA could offer you a better deal than you’re currently getting. This is because some smaller lenders don’t have the huge overheads that come along with the massive infrastructure of larger banks, and can pass those savings along. Moreover, lenders like credit unions, mutual banks and building societies are owned by their members, and aren’t driven to maximise profits for shareholders. This means they’re often able to offer much better rates.

Whether you’re an owner-occupier or an investor, there are huge upsides to the current trends in the home loan market. Even in a market where the RBA has stayed firmly on the sidelines, now might still be the best time to refinance for a better deal.

Compare refinance home loans today

Rates last updated August 19th, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.59%
3.59%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.64%
3.66%
$0
$0 p.a.
80%
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $2 million from a convenient online lender.
3.64%
3.65%
$0
$0 p.a.
80%
Low interest rate and limited fees. Add a 100% offset account for $10 a month.
3.49%
4.57%
$0
$395 p.a.
90%
Loans over $150k get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.
3.69%
4.11%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.68%
3.82%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
3.70%
3.70%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at 70% or below with this innovative online lender.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
Earn thousands of Velocity Frequent Flyer Points on your mortgage (subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
3.64%
3.79%
$0
$10 monthly ($120 p.a.)
70%
Low rate, low fee loan for owner-occupiers. You will need a 30% deposit to get this mortgage.
3.88%
4.40%
$0
$395 p.a.
90%
Lock in a very competitive 2 year rate and get package discounts on your credit card and offset account.
3.72%
4.10%
$0
$395 p.a.
80%
New borrowers or refinancers from another lender get a discounted rate with this package loan.
3.69%
3.70%
$0
$0 p.a.
90%
Package your loan and get an interest rate discount and help from an HSBC relationship manager. Low fees help you save even more.
3.84%
3.84%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.65%
3.66%
$0
$0 p.a.
80%
This special rate mortgage has no ongoing fees and offers flexible repayments. Save $595 in establishment fees before 30 September.
3.98%
4.41%
$0
$395 p.a.
90%
Take advantage of a low 3 year fixed rate, 40% offset account and no application fee.
3.75%
3.75%
$0
$0 p.a.
70%
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
3.72%
3.74%
$0
$0 p.a.
80%
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.54%
3.59%
$0
$0 p.a.
80%
Get a competitive rate, save on fees and access a 100% offset account plus redraw facility.
3.64%
3.64%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.68%
3.70%
$0
$0 p.a.
80%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments.
3.65%
3.66%
$0
$0 p.a.
90%
Competitive interest rate and low fees. Available with a 10% deposit. Partial offset account attached (offset up to $15,000).
3.75%
4.00%
$0
$248 p.a.
70%
Borrowers with a 30% deposit can get this competitive rate.
3.64%
3.64%
$0
$0 p.a.
70%
A basic variable home loan that offers a competitive interest rate with no application fees and no ongoing fees.
3.70%
4.13%
$0
$395 p.a.
90%
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
3.74%
3.74%
$0
$0 p.a.
80%
A basic owner-occupier home loan with a low variable rate that requires a 20% deposit.
3.79%
3.79%
$0
$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.74%
3.79%
$600
$0 p.a.
80%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.85%
3.85%
$0
$0 p.a.
80%
Pay no application and ongoing fees with Macquarie Bank Basic Home Loan. Split and redraw facilities included.
3.74%
3.74%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.64%
3.69%
$600
$0 p.a.
80%
A competitive variable rate for borrowers with a 20% deposit or more. Guarantor option available.
3.72%
4.11%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.71%
3.71%
$0
$0 p.a.
70%
A variable rate home loan that has a lot of flexible features. This loan has a 100% offset account.
3.74%
3.80%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
4.13%
4.14%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.89%
3.94%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.84%
3.89%
$600
$0 p.a.
90%
Buy your home with just a 10% deposit, few fees and a reasonable interest rate.
3.93%
3.94%
$0
$0 p.a.
80%
A low-fee line of credit loan from an online lender. Unlock the equity in your home and make interest-only repayments with a competitive rate.
3.64%
3.79%
$0
$0 p.a.
80%
Apply online for this fixed rate, low-fee loan with redraw facilities and an optional offset account.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
3.69%
4.54%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150k receive a discounted rate. NSW, QLD and ACT residents only.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule.
4.09%
4.11%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.89%
4.94%
$595
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying and pay no application or ongoing fees.
4.24%
4.27%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and get flexible repayment options and a redraw facility.
4.14%
4.81%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.68%
3.69%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.

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