SYDNEY, Australia – Philip Lowe, the governor of the Reserve Bank of Australia (RBA), gives all his support to home loan refinancing due to the mortgage interest rate-drop.
Lowe stated in his online speech on Tuesday, July 22, that he enjoyed shopping and asking for an interest rate discount. During the statement, the governor showed his support regarding the rise of refinancing a home loan. The basis of his support was the decrease in the interest rates of mortgages, and the drop was to historical lows.
As per Lowe, he encourages people to take the chance to recheck their mortgage, especially those who haven’t check yet. He also pushes them to find better deals.
The RBA governor shared his experience in a lot of public forums for several years. From his experience, he’s been inspiring people to check the rates from their banks. If the prices are not going down, or they never receive low ones, it’s time for them to move. He said it’s the time to set a meeting with their banker via Zoom conference and discuss getting better deals. He added that if the bank declined your request, it’s time to move on to another bank.
Lowe also shared some insights regarding the on-going COVID-19 pandemic, and there’s positive feedback. He said that the number of people who practise social distancing in their house. During this practice, they were utilizing their time to look for better deals on mortgages.
The governor explained that 10,000 Aussies who refinance mortgage are grasping the benefits of lower interest rates.
Occupiers refinanced with the current or another lender by $15.1 billion, which was in May. The report came from the ABS or Australian Bureau of Statistics. On the information, it also stated that there was a 25%-increase in the number of occupiers from April.
21,000 Aussies or more who live in their houses grabbed the chance of fierce rivalry, and it’s all for lower-risk mortgagors in the home loan ledger market. They refinanced an estimated amount of $10 billion, all worth of mortgages, to an outside lender in May.
The home loan commitments’ value in the same month, which is for the new owner-occupier, dropped about 10%. The decrease was massive that it fell to $12.31 billion.
Lowe stated that it was the first moment when refinancing loans’ value went high, reaching a number as high as newly bought properties. He shared how pleased he was to see the refinancing amount continue to move. He added that people could have better deals via refinancing, and it decreased some cash flow, and it also puts other competitors in line with the banking system.
The governor also said that the market for real estate went well, like how he hoped it to be. The market’s state will be from the rate of jobless Aussies, as well as those who were unable to work, especially younger Aussies.
Lowe also explained that if younger employees can get jobs, and they have undergone an excellent training, then the housing condition will support each other.
As per RBA, the fixed-rate mortgages are becoming famous these days, and these were lower than the rate mortgages of the new variable. The details were showing a growing share of refinanced or new loans with fixed percentages.
Lenders cut interest rates when it’s for fixed-rate mortgages over variable-rate ones, as per RateCity.
Forty lenders reduced interest rates over 487 fixed-rate loans from June up to this month, even when there are no amendments to the endorsed cash rate. There were 42 lenders abridged rates over 260 home loans for variable-rate mortgages. Also, over20 lenders reduced prices on variable and fixed products.
As a summary, there are 57 lenders experienced the interest rate-cut on mortgages.
The mortgage borrowers might be facing the benefits, while the home loan interest rate escalates. For low-interest home loans, the options are under 2% or around that rate.
As per the database of RateCity, the lowest fixed load rate was from Bank of Us. This bank was the first mortgagee with a mortgage rate to drop under 2%. Residents from Tasmania can have a fixed rate worth 1.99%, with a comparison rate of 2.71% on their loan.
Homestar Finance’s fixed-rate for the home loan was 2.06%, with a comparison rate of 2.28%.
Loans.com.au shares its introductory rate worth 1.99%, with a comparison rate of 2.71%. However, it’s only has a validity of 12 months, and once it expires, the price comes back to 2.57%.
As for Freedom Lend, you’re about to offer a variable-rate of 2.17% for new customers with a 30%-deposit rate.
Heritage Bank offers a fixed rate of 2.39% for three years, with a comparison rate of 2.53%.
HSBC’s variable rate is at 2.65%, having a comparison rate of 2.66%.
ABS shared data regarding refinancers, rising 30% monthly, and the data compared was from May to April. As per the report, the value increased from $12,021,800,000 to $15,192,700. As per the data, there are a lot of borrowers who were finding better deals. Also, they were able to look for these.
With the cash rate of RBA, which dropped five times, the lender’s borrowing costs became cheaper. It even drops down to a variable rate. Also, fixed rates dropped further. The lowest fixed price for a three-year owner-occupier fell from April’s 3.74% to July’s 1.99%. It only means that the low-priced home loan rate is available now. Even though lenders passed on previous cuts, the rate cuts are still uneven. Some consistently had a 0.25%-cut, while others give competitive rates to new clients.
Some borrowers didn’t have to search for better deals because one-third of loan switches from May were internal, where borrowers changed yet these stayed with the same lender.
With the on-going pandemic situation, refinancing mortgages is an opportunity to a lot of homeowners to enjoy a lower interest rate. Lowe pushes them to look for winning deals with the help of their banker, and check the best options available. He also advised them to check on other banks if your banker declined your request.