A new study from Great Southern Bank revealed that the increasing cost of living is the main motivator of refinancing among many refinancers.
The study showed that 94% of refinancers explored better home deals to manage increased costs of living amid rising interest rates.
Other common reasons for refinancing were the following:
- Expiring fixed rates (22%)
- Consolidating loans (21%)
- Paying off loans faster with new loan terms (15%)
- Getting new loan features (11%).
Meanwhile, more than half of refinancers find it a challenge to compute potential savings versus the costs of refinancing.
A third of refinancers also struggle with getting the timing right when refinancing.
Around the same struggle to know the right questions to ask their lenders and broker.
Meanwhile, 28% of refinancers said they find navigating the refinancing process complex and confusing.
The study also found that 26% of refinancers find it difficulty to find a lender that meets their needs.
Two Red Shoes founder Rebecca Jarrett- Dalton said refinancing enquiries are likely to increase in 2023 as many of borrowers find their fixed rates expiring.
“Many who would want to refinance would not qualify for their existing loans due to the need for banks to factor their debt at 3% above today's interest rates, which are 3% above where interest rates were at that time,” she told Your Mortgage.
These borrowers were tested at the current rates when they applied for the first time, so refinancing amid the current market conditions could be tough.
“We will therefore see a lot more repricing vs refinancing, renegotiating with existing lenders — which is already well in play,” Ms Jarret-Dalton said.
Ms Jarret-Dalton shared her dos and don’ts in refinancing, which include asking friends and family for recommendations for a trusted broker who can provide help. Her other tips can be found in this guide.
Photo by rattanakun on Canva.
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