Refinance: You Could Save Thousands
A while ago we published an article on whether to refinance in the wake of rising interest rates. Today we re-visit this topic from the opposite side of the coin - whether to refinance in the wake of interest rates that are going down, rather than up!
It's a reversal of fortune that has put the smile back on the face of home owners across Australia. For those on variable home loan rates or fixed interest rates due to expire, the smiles are even wider as they are looking at savings over the long term that could run into the many thousands.
With home loan mortgage rates at their lowest in nearly 50 years, it makes sense to check on the health of your existing loan. Also keep in mind that as the property market continues to show signs of improvement, many lenders are discounting interest rates and offering more attractive products.
There are many reasons to consider refinancing, such as wanting a better deal, consolidating debt, freeing up equity or renovating your home. The decision to switch between fixed and variable rate home loans is a common reason for refinancing. It is always useful to seek advice in this area from our office. As there are some great deals to be had in the current climate of record low interest rates, we can work with you on finding the right loan options for your situation. With advertised fixed rates in the 5 per cent range there are offers available that we could only have dreamt about a year ago.
If you want a good indicator of what is happening with fixed rates, keep an eye on the movement of the 90-day bank bill swap rates. Unlike the variable rate, which is influenced predominately by Reserve Bank policy, fixed rates are influenced by speculations of investors in the wholesale money market. Lenders base their decisions on fixed rate pricing on bank bill swap rates, so when they drop, lenders start to follow suit.
As your mortgage broker we are both a reliable and up-to-date source for what is going on in the money markets. Talk to us and we can help you make an informed decision that will bring long term benefits. With the right loan you can make significant savings over the course of your loan. Keep an eye to the future, and what you save now can help with short term cash flow or give you the leverage you need for additional investments.