Nationally, prices climbed 18.4% in the year ended Aug.31 – the highest annual growth rate in 32 years.
Figures from PEXA, which collects real-time real estate transactions on its electronic transfer platform, show that the number of refinanced mortgages continued to grow in August.
Interest rates on longer-term fixed rates, such as four and five years, have risen since March amid speculation that official interest rates could start rising by the end of 2023.
However, figures from RateCity show that there are still plenty of fixed rate mortgages available – at least among those with terms of up to three years – with rates below 2%.
Data from the Reserve Bank of Australia (RBA) shows that the new average floating rate in July was 2.72%, while the new average fixed rate for mortgages with terms between 1 and 3 years was 1.98%, a difference of 0.74 percentage point.
This shows that variable rates, on average, are still relatively high, as competition among lenders has been so focused on fixed rates, Tindall says. âThat’s why we’re seeing variable rate cuts, because that’s where lenders have the most fat to cut,â she says.
There are many reasons for the refinancing boom. During the pandemic, people focused more on their finances, including trying to save on mortgage costs.
Another likely contributor is the lure of âpaybackâ offers by lenders of up to $ 5,000 to persuade those refinancing their mortgages to switch to them.
The bottom line, according to RateCity’s Tindall, is that if your variable rate mortgage has an interest rate starting with a “3”, it’s time to look for a better deal – from your existing lender or another lender. .
Lenders generally offer lower interest rates to new borrowers.
RBA figures for July show that the average variable interest rate for homeowners taking out new loans was 2.72 percent, while existing homeowners pay about 3.05 percent.
âBorrowers should at least pick up the phone and haggle with their existing lender to get a better deal and be ready to move to another lender,â Tindall said.
âRefinancing doesn’t take long. Yes, the paperwork is boring – you have to go and get payslips and other chunks – but it’s not as difficult as a lot of people think, âshe says.
RBA Governor Philip Lowe reaffirmed in a speech Tuesday that the central bank is unlikely to start raising the cash rate before 2024.
- The advice given in this article is general in nature and is not intended to influence readers’ decisions regarding investments or financial products. They should always seek their own professional advice that takes their personal circumstances into account before making any financial decisions.