There has been a massive surge in people refinancing their home loans, according to data from the ABS. Refinanced home loans reached an all-time high of $17.2 billion in July – a 6% increase from June and more than double the amount we saw two years prior in July 2019.
So why is this happening?
The main reason is that the RBA cash rate is at the lowest it’s ever been at 0.1%. This means that there is a lot of competition amongst lenders who are offering record low home loan rates in order to get as many customers as possible.
Many borrowers are also opting to lock their interest rate as well as it was reported that lenders have started increasing their rates on 3–5-year fixed rate loans.
ABS Head of Finance and Wealth, Katherine Keenan said, “Borrowers are seeking out lower interest rates, particularly for fixed-rate loans, and cashback deals across a large number of major and non-major lenders.”
Covid-19 will likely push these numbers up even further as people find themselves on harder times during lockdown. Refinancing is one simple way to reduce your monthly repayments, so it makes sense.
These sound like amazing things that everyone should try to do right now, right? That may not be true so it’s important to contact our brokers at It’s Simple Finance. We can break down the fine print, discover the hidden fees and limitations that could exist within these loans.
We can help you decide whether a fixed, variable, or split loan is better suited to your needs, and, most importantly, we negotiate with your lender. Lenders will not automatically give you the lowest rate, you have to ask them for it. The negotiation process can be lengthy and time-consuming so leaving it up to us helps you sleep easy with the knowledge your broker is out there getting you the best deal.
In other news, it was R U Ok? Day recently and even though it has passed that doesn’t mean you shouldn’t still be checking in on your friends and family. Starting that conversation can be daunting so we thought we would share the R U OK? advice on the topic.
Step one is to pick your moment. Pick a moment when your spending meaningful time with the person of concern. This may be harder during lockdown, but the charity lists some situations where this works really well:
- while exercising together
- when spending time together socially or during an activity
- during breaks from work or study
- when connecting or doing activities together online
- while sharing a meal
- while travelling together – even a short trip can be a good time to talk.
Step two is starting the conversation. Be relaxed and friendly in your approach and think about how you can ease into the conversation. If they don’t want to talk, just remind them that you are there for them whenever they are ready to talk.
Step three is to make sure that you actually listen. Don’t try to solve their problems immediately and try to have an open mind. Some other tips include:
- don’t rush them or interrupt. Let them speak in their own time
- encourage them to explain
- show you’ve listened by repeating back what you have heard and asking if you have understood them correctly.
Step four is to encourage action. You don’t have to have the answers, but you can help them consider the next steps they can take to manage their situation.
Step five is to check-in again shortly. Make sure you follow up within the next couple of days. When you check-in, ask how they are feeling and if anything has helped since the last time you spoke. If they have not taken any steps yet, be patient and ask if they would like to find some options together.
Take care of each other especially during these hard times.