Thousands of home owners who locked into fixed mortgage rates before the Reserve Bank cut the cash rate three years ago are now looking to refinance, new research has found.
More than 100,000 Australians committed to fixed rates of more than eight per cent just before the global financial crisis. These borrowers missed out on the big reductions in interest rates introduced by the RBA in response to the GFC.
Loan Market Group chief operating officer Dean Rushton said many of these home owners were now coming off the fixed rate terms and looking to obtain a lower interest rate.
“Thousands of people who fixed their rates during 2007 and early 2008 when the cash rate reached 7.25 per cent have had to sit back and watch interest rates drop dramatically to combat the GFC,” Mr Rushton said.
“These customers have been waiting for years to get a better deal.
“Even though the cash rate has now come back to 4.75 per cent, it is still well below the level the RBA had taken it during 2007/2008.”
Mr Rushton said Loan Market has experienced a jump in enquiries from borrowers coming off fixed rates.
“Enquiries for borrowers wanting to move out of their fixed rates have jumped nearly 30 per cent this year,” he said.
“These are almost all borrowers stuck on a high fixed rate from 2008.”
Mr Rushton said a recent survey of the company’s own mortgage brokers had also found 39 per cent said their customers were refinancing because they believed they could obtain a more competitive loan.
“The good news for these borrowers coming off fixed rates is that they are entering an extremely competitive market where lenders are wooing customers with a range of special offers and rate discounts,” he said.
Mr Rushton said 25 per cent of the 253 brokers who responded said their customers were refinancing to consolidate debts, 15 per cent were doing so to access more equity while 10 per cent wanted to top up their mortgage.