In today’s competitive lending market, borrowers hold the trump card.
Rising property values have made headlines in recent months, but what’s less well known is that demand for home loans is very low right now. Ten years ago, in 2004, demand for home loans was growing at 22 per cent annually. Today that figure is closer to just 6 per cent.
Low interest rates are fuelling the situation with many Australians paying off their home loan at an accelerated pace. Indeed, some borrowers are paying back debt as fast as banks can lend it out.
A great time for refinancing
As lenders fight over a shrinking pie, borrowers are being treated to red hot loan deals with many banks offering discounts on advertised rates.
In fact, for anyone with a home loan there has probably never been a better time to consider refinancing their loan.
Be wary short term freebies
Amid this intense competition, it’s worth being wary of offers involving short term enticements. Cash-back deals for example, can provide a nice short-term benefit, but always crunch the numbers because sometimes you may find the sweetener is little more than a smoke screen for a more expensive home loan. Borrowers are likely to derive greater benefits in the long term from lower rates.
Fixed rates deliver great value
One area where borrowers can take advantage of exceptionally good value is in fixed rate loans. Many fixed loans are well below 5 per cent at the moment, with some banks offering the lowest home loan rates in over two decades.
Make your own rate cut
It’s definitely worth checking out what’s available. If you could switch a $300,000 home loan charging 5.25% p.a to one costing 4.75% p.a, you could pocket up to $26,000 in savings over the life of a 30 year loan.
Discover how much you could save on your home loan by calling ME Bank on 13 15 63 or visit mebank.com.au.
Members Equity Bank Limited ABN 56 070 887 679 Australian Credit Licence Number 229500.