Don’t let the banks win. Refinance your mortgage.
The Reserve Bank of Australia’s (RBA) latest interest rate hike has lifted Australia’s cash rate by a record 3.50% in just 10 months:
This has taken the cash rate to its highest level since 2012 and has lifted average variable mortgage repayments by around 50%.
For somebody with a $500,000 variable rate mortgage, this will add $1,084 dollars per month in extra repayments or $12,640 per year, according to Realestate.com.au:
According to Canstar editor-at-large Effie Zahos, an average household now needs to work “an extra 29 hours per month to make up that shortfall in repayments”.
The situation facing mortgage holders will only worsen from here given the RBA has indicated that it will lift interest rates further in the months ahead.
There are also nearly 900,000 borrowers, or 23% of Australia’s total mortgage book, that will this year switch from cheap pandemic fixed rate mortgages originated at rates of around 2% to variable mortgages with rates more than double these levels.
The extent of this fixed rate “mortgage cliff” is highlighted in the next chart from Morgan Stanley.
The volume of fixed rate mortgages expiring will rise precipitously from April, peak in May, and then remain at high levels through the remainder of this year:
Already, many Aussie borrowers are acting proactively to mitigate the financial impact by refinancing their mortgages to cheaper rates.
The value of mortgage refinancings rose to a record high $214 billion in the year to January, which is more than double pre-pandemic levels:
With this background in mind, MacroBusiness recently partnered with Compare n Save to launch a home loan comparison service.
This service helps borrowers compare hundreds of loans to potentially save thousands of dollars in mortgage repayments.
Should you wish to proceed, the team at Compare n Save will manage the entire application process for you.
Try the Compare n Save comparison service for yourself. It takes less than a minute.
Compare 100s of loans in seconds, hassle free…..
and when you’re ready to apply, we’ll manage the process for you.
I Want To Refinance
I Need A Loan
For example, if you are looking for a better deal on your mortgage, simply hit the “I Want To Refinance” button, enter the amount you wish to borrow and the interest rate you are currently paying.
The Compare n Save comparison tool will then show you in simple terms how much you could save by refinancing, alongside loan options.
View the available loans on offer and if you wish to proceed with an application, simply hit the Enquire button, fill out your contact details and the team at Compare n Save will call you back to get the process moving. It’s that easy.
As an example, consider somebody seeking to refinance a $500,000 loan on a home valued at $700,000 and currently paying a variable mortgage rate of 6%. They could save $350 per month ($4,200 a year) by refinancing to the lowest rate on offer:
The Compare n Save tool lists hundreds of loans that a borrower can compare, from cheapest to more expensive.
If you proceed with a loan through Compare n Save, MacroBusiness receives a cut of the commission, so you will also be helping the site.
The RBA’s record interest rate hikes are unavoidable. But you can at least lessen the pain by ensuring you are paying the lowest possible rate on your mortgage.
Don’t let the banks win.
