RBA shows huge savings from refinancing your mortgage

The Reserve Bank of Australia’s (RBA) recent Monetary Policy Statement has highlighted the impact of rising interest rates on Aussie mortgage holders. Unlike their counterparts in other advanced English-Speaking nations, Australian mortgage holders have experienced a significant increase in their mortgage repayments, thanks to a higher percentage of borrowers on variable rate mortgages.

However, with many fixed-rate mortgages expiring in 2023, the RBA has encouraged struggling mortgage holders to refinance to take advantage of better deals and potentially save thousands of dollars in annual mortgage repayments.

Why Australian mortgage holders are hit harder

According to the RBA, Australian mortgage holders are hit harder by rising interest rates because a larger proportion of borrowers are on variable-rate mortgages. This means that increases in official interest rates are more quickly passed on to mortgage holders in Australia than in other countries.

However, Australian households did take out a record share of cheap fixed-rate mortgages during the pandemic, which has made monetary policy in Australia less responsive. As a result, the average outstanding mortgage rates are lower than if all borrowers were paying variable rates.

The benefits of refinancing your mortgage

The RBA governor, Phil Lowe, has encouraged struggling mortgage holders to hunt down better deals and refinance to save on their mortgage repayments. The average variable interest rate on the expiry of a fixed-rate loan is around 50 basis points higher than the average variable rate on a new mortgage, suggesting that refinancing could save borrowers significant sums.

Using a comparison service such as MacroBusiness Compare n Save, borrowers can potentially compare hundreds of loans to save thousands of dollars in annual mortgage repayments. Therefore, it’s important to take advantage of the competitive market for new borrowers and switch to a better deal.

Related facts

• Australian mortgage holders, on average, have experienced a 200 basis point increase in mortgage repayments due to rising interest rates.
• A higher proportion of borrowers in Australia are on variable-rate mortgages compared to other advanced English-Speaking nations.
• Around 880,000 fixed-rate mortgages will expire in Australia in 2023

Key takeaway

If you’re struggling to meet your mortgage repayments or want to save money, refinancing your mortgage could help you take advantage of better deals and save thousands of dollars in annual repayments. With many fixed-rate mortgages set to expire in 2023, now is the time to explore your options and switch to a better deal.

Conclusion

The RBA’s recent Monetary Policy Statement has highlighted the impact of rising interest rates on Australian mortgage holders. However, with many fixed-rate mortgages set to expire in 2023, now is the time to refinance and take advantage of the competitive market for new borrowers. Using a comparison service such as MacroBusiness Compare n Save, you can find the best deals and save thousands of dollars in annual mortgage repayments.