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Is it time to get a better rate?
Mortgage-holders are being advised to take advantage of record-low interest rates and refinance if they haven’t already done so.
Is it time to get a better rate?
Mortgage-holders are being advised to take advantage of record-low interest rates and refinance if they haven’t already done so.
New research by RateCity has found that 43 per cent of Australian mortgage-holders are looking to refinance to a better rate, taking advantage of a record-low cash rate.
By comparison, a survey conducted by RateCity in 2018 revealed that 19 per cent of borrowers were looking to refinance, following the banking royal commission. That’s more than double in just two years.
Sally Tindall, research director at RateCity, highlighted that mortgage-holders are no longer tolerating overpaying for their mortgage.
“The loyalty tax gets worse the longer you stick with your bank.
“It’s taken a pandemic to get people to shift their mindset, but hopefully we’ll come out of it more budget-conscious and less complacent towards our mortgages,” she said.
Ms Tindall highlighted that the large financial institutions are willing to fight for consumers, meaning mortgage-holders can take advantage.
“The banks are pulling out all the stops, too, putting some of the biggest cashback offers and rock-bottom rates on the table and adding more flexibility on fixed-rate loans to attract new business – and it is working.
“The best way you can get a rate cut is to turn yourself into a new customer and switch. If you aren’t in a position to refinance, pick up the phone and try some old-fashioned haggling with your bank,” she said.
How much can a mortgage-holder save?
According to RateCity’s analysis of RBA data, existing owner-occupiers are paying over 1 per cent more than the lowest variable rate in the market.
If they switched to the lowest ongoing variable rate, that’s a saving of $2,805 in the first year, and $19,235 over five years, including switching costs, on the typical $400,000 loan.
This is based on an owner-occupier who switched five years into a 30-year loan.
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