With interest rates starting to decline, Australian homeowners are jumping at the opportunity to refinance their mortgages in search of better deals. The Reserve Bank of Australia’s (RBA) decision to cut the cash rate in February 2024—marking the first rate reduction in four years—has fueled a surge in refinancing activity.
Major lenders, including Westpac, have reported a sharp increase in refinancing inquiries. Over the past quarter, Westpac recorded a 45% rise in borrowers switching their home loans to the bank. This follows findings from Westpac’s Home Ownership Report, which indicated that 30% of homeowners considered refinancing in the December quarter.
The trend is further confirmed by Australian Bureau of Statistics (ABS) data, which shows that 61,749 home loans were refinanced between lenders in the December quarter. This figure represents a 12% increase from the previous quarter and a 1.5% rise compared to the previous year.
Why Homeowners Are Refinancing
The Finance Brokers Association of Australia (FBAA) recently revealed that more than half of Australian mortgagor’s plan to refinance in the next two years, hoping to take advantage of lower rates. As the cost of living remains a key concern, borrowers are becoming more proactive in securing the most competitive mortgage options available.
The use of technology in refinancing is also gaining traction. According to Westpac’s research, 79% of mortgage holders believe the home loan application process needs to be more digital, while 82% of past and current refinancers want a quicker and more streamlined experience. To address this demand, Westpac launched a direct-only refinancing offer through its website and banking app, featuring a competitive 5.84% per annum rate for owner-occupiers with up to a 70% loan-to-value ratio (LVR).
The Role of Brokers and Technology
While digital refinancing options are growing, many borrowers still prefer working with brokers for their expertise and personalized guidance. More brokers are leveraging technology, including loan pricing tools, to help clients secure the most competitive rates and identify refinancing opportunities.
Banks and lenders are also investing in digital advancements, with reports highlighting the increasing role of artificial intelligence (AI) in streamlining mortgage applications. However, despite the recent rate cut, some lenders have yet to pass on the full savings to customers, meaning many homeowners could still be paying higher interest rates than necessary.
Growing Interest in Property Market Entry
Beyond refinancing, brokers are witnessing an uptick in pre-approvals as buyers look to capitalize on falling rates and enter the property market. With competition among lenders intensifying, homeowners and prospective buyers alike are encouraged to explore their options and ensure they are securing the best possible mortgage deals.
If you’re considering refinancing, now is a great time to review your mortgage and take advantage of the evolving lending landscape. Whether through digital platforms or expert guidance from a broker, finding a lower rate could lead to significant long-term savings.
Contact us today to explore your refinancing options and secure a better rate.