Homebuyers, especially those looking to refinance their existing home loans have taken advantage of an opportunity to make the most of stable interest rates.
According to the latest data from the Australian Bureau of Statistics (ABS), the number of loans on owner-occupied properties in August was the highest it has been since February (seasonally adjusted), with 47,540 recorded. It also showed an increase of 1 percent since the previous month of July.
But despite this increase, first-time home buyers are shying away from purchasing their first home.
August saw the lowest number of first-time owner-occupied housing commitments made since January 2005 at 7460, which was also a decrease of 2.5 percent since July. The average loan size for these loans also fell by $3300 in August compared to July.
Refinancing home loans: the popular choice
According to the ABS report, more Australians made the switch in August, with almost 1 percent more refinancing their mortgages for established dwellings compared to July, and over 6 percent more compared to January 2010 (seasonally adjusted).
This suggests that more borrowers are prepared to change lenders to avoid paying more than they need to, and are switching to better home loan deals.
What does this mean for home buyers?
The Reserve Bank of Australia’s official cash rate has stabilised at 4.50 percent since the last movement in May 2010.
With more than a month remaining of “mortgage season” and interest rates expected to rise before the end of the year, now could be a good time for home buyers to get your finances in order and beat the rush.
Shop around and compare home loans online to see what deals are currently available and see how much you can save. For instance, one of the best variable rate home loans on RateCity for a $500,000 mortgage is 6.39 percent by State Custodians. That’s 99 basis points less than the current benchmark (average of the major four banks) standard variable rate of 7.38 percent.
And in repayments, the difference between the two rates is $314 per month or over a 25-year term, which potentially saves more than $94,000.
If you currently have a home loan, consider making the switch as you could be missing out on the chance to refinance to a better deal than what you are currently getting. Be sure to find out if there are any fees involved for exiting your current loan as well as setup costs for new loans.