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Date Published : Monday, January 21, 2008
Record numbers of Australian homeowners are refinancing their mortgages as they look for better deals in a bid to avoid the impact of another interest rate increase.
The opening up of the home loan market, coupled with a government crackdown on the maximum amount charged on mortgage exit fees, has meant more Australians than ever before are considering refinancing their mortgage.
According to consumer group Choice, the number of homeowners refinancing their loans increased by ten per cent in November.
Refinancing is an increasingly popular method of accessing the existing equity in your home. Equity is the difference between how much you still owe on your home loan and how much your home is worth.
Homeowners choose to refinance their mortgages to consolidate their debts, take advantage of cheaper or better deals elsewhere or to use the equity in the home to finance a holiday or home improvements.
Port Macquarie homeowners Bruce and Leanne Smith, who have two children under the age of two, told the Daily Telegraph of their reasons for refinancing, blaming exit fees for hindering their move.
Mr Smith said: "Leanne will have to go back to work six months earlier from maternity leave now, because things are getting tighter for us.
"[Exit fees are] the main reason we haven't gone straight away, all the fees that are tied to our particular loan. We don't know if we'll be better off leaving or not.''
With the Treasury looking into the legality of charging exit fees, refinancing home loans could become a lot easier for Australians over the coming months and years.
Find and apply online for loan deals.
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