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Key Points
- The number of Australians refinancing their mortgages in the March quarter exceeded that of the December quarter.
- Shifting cash rates may empower borrowers by providing more leverage in negotiations with competitive lenders.
- The average loan size for owner-occupied homes declined during the first quarter of the year.
The rise in Australians refinancing their mortgages in the year’s first quarter might indicate that now is an excellent time to explore refinancing opportunities, according to a finance expert.
The Australian Bureau of Statistics (ABS) reported that 65,030 home loans were transferred between lenders in the March quarter, marking a 5.1 percent increase from the previous quarter.
Sally Tindall, who oversees data insights at the financial comparison platform Canstar, mentioned that refinancing tends to surge when interest rates are reduced.
“We typically notice a boost in refinancing following a cash rate reduction. That’s the reason behind the increased refinancing activity during the period of 13 rate increases when banks were vying for your patronage,” she explained to SBS News.
“Part of this rise in refinancing activity could stem from the cash rate cut in February.”
The Reserve Bank of Australia (RBA) is scheduled to convene next Tuesday to disclose any adjustments to its cash rate target..
‘Pick up the phone to your bank’
Tindall said rate cuts bring mortgages front of mind for customers who are more likely to shop around for alternative lenders.
“In the next four days or so, right now even, is a fantastic time to pick up the phone to your bank and haggle for a personalised cut,” she said.
“If you can renegotiate before a potential RBA cut next Tuesday … you are then giving yourself a double cut if you’re on a variable rate.”
It would be up to the banks whether or not they pass along the savings, but historically, , according to Tindall.
Doing research ahead of time on the offerings of different banks can be a “bargaining chip” in negotiations.
“Three of the big four banks are now offering an advertised lowest variable rate of 5.84 per cent. Use that as your benchmark if you are paying more,” she said.
Tindall said it’s important to be aware of any switching costs or caveats around home loans, and that it can take up to six weeks to process, but the savings can be worth it.
“For many, the potential savings from refinancing, even in the initial one or two years, could offset the effort and expense involved,” she pointed out.
Average loan sizes fall
The ABS lending indicators data also showed the number of loan commitments for dwellings fell in the first three months of the year.
In the March quarter there were 127,108 loan commitments, a 3.5 per cent drop from the previous quarter. The value of the loan commitments fell by 1.6 per cent.
The number of new owner-occupier loan commitments for dwellings fell 3.4 per cent in the quarter while the value fell 2.5 per cent.
These loans were also on average $6,000 less than in the December quarter, sitting at $660,00 for March 2025.
However, loan sizes rose in every state and territory when compared to March 2024, with a national average increase of 8.37 per cent.
The most significant shift occurred in South Australia with a 14.32 percent increase in refinancing, while the smallest increase was in the ACT, where loan sizes grew by just 3.35 percent.
Source: SBS News
Tindall said these figures were healthy considering the interest rate pressures borrowers have been under.
“I would expect that the new lending data is likely to pick up potentially as soon as the next quarter.”
The information in this article is general in nature and is not intended as financial advice. You should consult with a licenced professional to make the decisions that are right for you.
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