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Are you a sleepy mortgage holder?

By ,| 5 min read

Australia has seen four cash rate hikes in a row, with August bringing another whopping 50 basis point increase.

This means home loan repayments are on the rise. While many borrowers are turning to their mortgage brokers for advice, others are feeling reluctant about refinancing.

In this article, we discuss what a sleepy mortgage holder is, why homeowners are running to refinance and how to overcome refinancing uncertainty so you can get a better deal.

What is a sleepy mortgage holder?

A ‘sleepy mortgage holder’ is a borrower with a home loan who has put off checking their loan for over 2 years.

If you haven’t considered checking your home loan, are a self-proclaimed procrastinator or have simply forgotten to do a review in 2 years or more, you could be a sleepy mortgage holder.

If you’re sick of seeing your interest rate jump or wondering why your interest rate seems to be higher than everyone else's, it might be time to complete a Home Health Check™.

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Why are homeowners running to refinance their home loans?

2022 is shaping up to be the year of rate rises. After over a decade of declining cash rates, the recent level of inflation has caused the RBA to jump into action.

As a result, we’ve already seen the cash rate rise multiple times – and experts are saying the cash rate could reach over 2.5% by the end of the year.

Following the very first cash rate hike of 25 basis points in May 2022, we saw homeowners jump to their feet to take action on their home loans.

David Hyman, Lendi Group CEO, says, “during the week of the [May] RBA announcement, we saw a 32% increase in the total number of home loan enquiries on the Lendi platform, as compared to the four weeks leading up to the rate rise.

“Additionally, in the 24 hours leading up to when the cash rate announcement was made, we saw an increase of over 113% in the number of refinancing enquiries on the Lendi platform from 2 May compared to 3 May. The increase in enquiries indicates that savvy Australians are starting to consider their refinancing journey sooner rather than later.”

How are Aussies feeling about the recent rate hikes?

We spoke to over 30 Lendi Home Loan Associates after the rate hike in May to get a better understanding of how our customers felt after the first cash rate rise in 11 years. We found that:

  • 80% of consultants said their customers were more open to speaking to a broker about refinancing after the rate hike
  • 64% said they felt a sense of urgency to progress quickly since the first rate hike in May
  • 79% said their customers were slightly worried about their home loan situation after the May rate hike
  • Many described their feelings about the rate hike as ‘cautious, uncertain, anxious, frustrated and worried’.

Why are some homeowners reluctant to refinance?

In a survey of 1,000 borrowers, 80% said their home loan was their largest monthly expense.

So, why are homeowners so reluctant to refinance?

60% of respondents from the same survey said refinancing was a ‘hassle’ they’d like to avoid.

61% said they were ‘cautious about refinancing’ and weary of ending up worse off.

Why checking your home loan and rate is a good idea

Just like you might reevaluate your budget when you get a pay rise or your financial circumstances change, it’s important to review your home loan from time to time.

Your situation might look vastly different from what it was when you first settled your property or even from the last time you refinanced your home loan.

Mortgage brokers take the hassle out of home loans and can compare different offers you might be eligible for from several lenders on your behalf.

You won’t be pressured into making any changes you aren’t comfortable with. In fact, a home loan review can be just that. The best part is, reviewing your home loan is completely free with a Lendi Home Loan Specialist.

While you could secure a lower interest rate and lower your loan repayments, reviewing your home loan can benefit you in other ways. Sometimes changing your home loan structure to better suit your circumstances and needs can help you save big too.

If you’re paying for but not using certain features in your home loan, like an offset account, it might help to remove these features to avoid the fees that come with them.

Even if refinancing isn’t the answer for right now, it helps to know that you’re still getting a competitive deal on your home loan.

How much can you save by refinancing?

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What are the benefits of refinancing?

If it’s time to refinance, it means there’s a better deal than the one you’re already getting, so you could be saving more in the long run.

Refinancing can help you:

How often should you refinance your home loan?

There’s no hard and fast rule on how often you should refinance your home loan.

Whether you’re in the 2nd or 20th year of your loan term, refinancing can be a great way to ensure your home loan structure and features still work for your needs and circumstances.

How long does it take to refinance?

Generally speaking, refinancing can take around 4-6 weeks. But, depending on how prepared you are to submit documents and how quickly you reply to the lender’s questions, refinancing can take as little as a week.

What fees are involved with refinancing?

The costs of refinancing will differ from borrower to borrower and will depend on your current and new lender, the state or territory you live in and your current financial situation.

Although these fees might seem overwhelming, it’s crucial to weigh the costs and savings to know whether you’ll come out on top. And you don’t have to do it on your own – our Home Loan Specialists can make these calculations for you.

Some of the fees you might encounter include:

  • Break costs
  • Application fees
  • Establishment fees
  • Discharge fees
  • Lenders Mortgage Insurance (LMI) if you have less than 20% equity in your property
  • Valuation fees.

Should you refinance your home loan?

Whether or not refinancing is a good move for you will depend entirely on your current circumstances and home loan needs.

If you’re rolling off the end of your fixed term, your financial situation has recently changed or you’re feeling anxious about the recent rate hikes, it could be worth checking in with an expert.

Chatting to our Home Loan Specialists is free – we won’t charge you a cent for reaching out and getting the home loan help you need. Book an appointment at a time that suits you to get started.

References

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: refinance, home loan, mortgage repayment, repayments, cash rate, rba cash rate

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.

# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.

Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 25 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.

*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.

IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria. Top rates include lenders who are on our panel and are then defined by the circumstances provided by the borrower.

The Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.

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