The price of loyalty? $4,000
Staying loyal to your home loan lender could be costing you dearly.
August has just seen the Reserve Bank of Australia (RBA) jack up interest rates by another 0.5%.
It’s the fourth consecutive rate hike since May, and it’s meant Australians with a variable rate mortgage have seen their rate rise a whopping 1.75% in just four months.
That’s left home owners digging deep into household budgets to find extra cash for higher repayments.
A study by Savvy found over six out of ten (60.6%) mortgage holders will cope with rising rates by spending less on consumer goods. One in three (32%) will be forced to dip into personal savings.
But it doesn’t have to be this way.
There is a solution to navigating higher rates that doesn’t involve scrimping or using up precious cash savings.
The race to refinance
Smart home owners are taking action of their own, giving their old bank the flick and moving to a lender with a lower rate.
Figures from the Australian Bureau of Statistics confirm the stampede to refinance. In June 2022 alone, a record $12.7 billion worth of mortgages were refinanced.
 Value of external financing (seasonally adjusted) (graph pictured above. Source: https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release
Make your own rate cut
There’s a good reason why so many home owners are switching to a new loan: Lenders continue to offer their lowest rates to new customers.
How much lower?
Data from the RBA confirms loans to new borrowers are 0.5% cheaper on average than the rate being paid by existing customers.
Think about that for a moment.
A person who has just got a new loan from a lender can pay 0.5% less than a long-term customer like you. So much for customer loyalty, right?
$4,000 potential savings by refinancing
Consider this. The average mortgage in NSW is worth about $800,000. So, switching to a new loan that cuts your rate by 0.5% can see you save $4,000 in the first year alone.
That’s an extra $4,000 in your pocket to spend on groceries, dining out, school fees, a holiday…anything.
If you like the sound of $4,000 each year going to you – rather than your lender, contact the team at AAP Finance Brokers.
We make refinancing easy, pinpointing the loan that’s right for you and taking care of the paperwork to streamline the process.
All you have to focus on is how you’ll spend those sweet-as savings. Call today to find out how much you can save by switching to a lower rate loan.
If you are seeking financing for your business or seeking advice on your business finance, call AAP Finance Brokers 1300 141 453.