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COVID impact on property market: Why are so many people refinancing their home loans?

Mortgage rates likely to remain at record lows well into 2022. Source: Unsplash/Tierra Mallorca

The latest figures from the Australian Bureau of Statistics (ABS) reveal that mortgage refinancing has skyrocketed to an all-time high in June, 2021.

With the total value of refinanced loans hitting $16.24 billion in June, Melbourne-based mortgage broker Sartaj Singh explains why many property owners have refinanced their existing home loans.

“Many of the major home loan providers are offering cashback schemes and considerably lower rates after the Reserve Bank of Australia slashed their interest rates to an all-time low. Property owners are trying to avail this opportunity by refinancing their home loans,” he said.


Highlights:

  • Mortgage refinancing has seen an upward trend during the COVID-19 pandemic.
  • The latest figures from ABS reveal refinanced loans hit $16.24 billion in the month of June.
  • Experts reveal major reasons why people refinance their home loans. 

Mr Singh said that the COVID-19 pandemic has also prompted many families to reconsider their finances.

“People have also been thinking about benefitting after a massive surge in the property prices compared to the pre-COVID times.

“When you refinance, you often get to access the built-up equity of your home, which is normally the difference between the market value of your home and your remaining loan balance. This equity can then be used for buying another property or to any other advantage," he explained.

Know major reasons to refinance your home loan in 2021.
Know major reasons to refinance your home loan in 2021.
Pexels

Mr Singh, however, advised that property owners must take a cautious approach and shouldn’t get lured into the ‘cashback schemes’ while refinancing.

“Mortgage is a very long-term financial commitment. You must check your financial standing and future needs and opt for a home loan that best fits their needs rather than just following a trend,” he said.

Click on the audio button to listen to the full conversation with Mr Singh.

COVID impact on property market: Why are so many people refinancing their home loans?
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People in Australia must stay at least 1.5 meters away from others. Check your state’s restrictions on gathering limits.

If you are experiencing cold or flu symptoms, stay home and arrange a test by calling your doctor or contact the Coronavirus Health Information Hotline on 1800 020 080. News and information is available in 63 languages at sbs.com.au/coronavirus

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