Rate jitters prompt borrowers to refinance in droves

Font size :

The recent interest rate increases and threat of further rate hikes are taking a toll on homeowners, as shown by the massive jump in refinancing commitments. The number of loans for refinancing purposes surged by 10.6% in November - the biggest increase in six-and-a-half years according to recent data from the Australian Bureau of Statistics (ABS).

Craig James, chief economist with CommSec, said the most recent rate hike in November prompted more borrowers to either shift loans to another lender or seek better terms. "The upsurge in refinancing activity is a very positive development, indicating that people are keen to get their financial houses in order so that their lifestyles aren't adversely affected by rising interest rates," James said. "Borrowers aren't sitting around; they're actively refinancing loans to ensure that rising interest rates don't cramp their lifestyles."

The number of new housing loans was also very strong, rising by 4% in the same month. Tasmania recorded the highest rate of growth of almost 10%, followed by Victoria with a 4.7% increase.

The ABS data also showed a significant increase in the proportion of borrowers taking out fixed rate loans - jumping to an eight-year high of 24% from 21% in October.

"Home loan borrowers clearly have had enough of rising interest rates, with one in four opting in November for fixed term rather than variable rate loans," James said.

However, falling affordability continues to haunt first homebuyers, with the proportion of first-time buyers dropping from 18.7% to 18.3% in November. Potential homebuyers cancelled $1.9bn worth of previously committed loans in November - a whopping 19.7% compared to a year ago.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Wednesday, Sep 20, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords