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'Patience is a virtue' with interest rates...or so they say

More than ever before with rates remaining high, home loan customers are seeking a reprieve and asking the question 'can I refinance'.

For many First Home Buyers who bought in Covid, they more than another other demographic have had a greater likelihood of a change in their circumstances, post buying. Whether it has been a change of job, commencement of study or new addition to the family, many young customers are finding that they cannot seek a better home loan interest rate than what they are on right now.

This hasn't been helped by the high rates at which banks are required to assess loans, which, for many lenders, is sitting around 9% (unless you consider the 'in' discussed in my last post that could help).

What this has meant for many customers is that they feel like they need to tread water right now - and wait.

In the meantime, it means that for some home loan customers they are no longer saving. The savings buffer that they were to accumulate in the past is now re-directed towards home loan repayments and increased living expenses. For others, they are not seeing their home loan balances reduce despite their repayments. This is because a greater percentage of their repayments are now taken up with interest.

The question I am often asked is where will it all end?

For a greater part of 2023, we have not seen banks compete on interest rate. Rather, they have collectively followed suit with any cash rate rises from the Reserve Bank. Coupled with a removal of many refinance cash-back offers, it has made identifying a better home loan option between banks harder.

But they are out there. Much harder to find but they are out there. This is where you need to have a broker you trust who can identify any options for you.

For those whose circumstances right now does not support a change to their home loan for the better, it will require patience and perseverance until the banks are forced to start to compete on rate again. Without the incentive of cash back offers, there will come a time where this will happen.

Keep your lines of communication open with your broker so you are ready to act as soon as that moment arises.


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