So, where does that leave homeowners wondering whether now is a good time to refinance?
The decision as to whether to refinance depends largely on your individual situation and goals. Here are a few key considerations to think about when deciding whether or not to refinance.
The Latest Inflation Data was Promising
In case you missed it, the consumer price index (CPI) rose by 1 per cent in the second quarter of 2024, bringing annual headline inflation to 3.8 per cent.
While this was above the March quarter figure of 3.6 per cent, an important measure of underlying inflation (the trimmed mean) declined for a sixth quarter in a row, signalling inflation is still trending down.
The Reserve Bank of Australia (RBA) wants to get inflation within the 2 to 3 per cent target range, which looks likely to happen towards the end of 2025.
At its latest meeting, the RBA board decided to leave the cash rate on hold at 4.35 per cent. However, Governor Michele Bullock has since indicated a near-term cut in interest rates was not on the cards.
So, should I Refinance Now or Wait it Out?
Without a crystal ball, it is hard to know exactly when the RBA will cut the cash rate. However, refinancing may make sense if you fall under any of the following categories.
You’ve been with the Same Lender for a Long Time
Refinancing can be onerous, but it could be worth the effort. If you have had the same home loan for several years, chances are you could be getting a more suitable offer with another lender.
You’ve Never Heard of a Redraw Facility or Offset Account
Certain loan features and tools may help you reduce your interest and get ahead, so it is worth considering refinancing.
With a redraw facility, for example, you could make extra repayments on your mortgage and reduce your interest, but still access funds should you need them.
An offset account, on the other hand, allows you to deposit money into a transaction account that is linked to your mortgage. Deposited funds are offset against your loan balance, reducing your interest.
Your Situation has Changed
Have your financial circumstances changed since you took out your original home loan? If so, all the more reason to consider refinancing to a home loan that marries with your current financial situation and long-term objectives.
Your debt is feeling unmanageable
You want to Access Your Equity
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