The fervor for cashback incentives reached its peak in 2023, with lenders aggressively offering rewards of $5,000 or more to entice borrowers into refinancing their home loans.

Fast forward to 2024, and the landscape has shifted dramatically. The allure of cashback offers has dwindled, with fewer lenders participating and reduced payout amounts, averaging around $2,000.

So, does this signal the conclusion of the refinancing boom? Let’s delve into the details.

The Refinancing Frenzy of 2023:

Last year witnessed a surge in homeowners refinancing their mortgages at unprecedented rates. As interest rates climbed, an increasing number of borrowers sought out better deals by exploring alternative home loan options.

This surge in refinancing activity was largely fueled by borrowers transitioning from pandemic-era low fixed-rate mortgages to higher variable rates. Data from the Reserve Bank of Australia (RBA) indicates that 880,000 borrowers shifted away from fixed rates in 2023, leading to significant spikes in their monthly repayments.

According to figures from the Australian Bureau of Statistics, monthly mortgage refinances peaked at $21.5 billion in July 2023, marking a 21.8% increase compared to the previous year. However, as the year progressed, the pace of refinancing gradually decelerated, with the value of refinances dropping to $17.1 billion by December 2023.

What Lies Ahead in 2024?

The number of fixed-rate mortgages set to expire in 2024 is lower compared to the previous year, suggesting a potential slowdown in refinancing activity.

Nevertheless, there are still approximately 450,000 fixed-rate home loans scheduled to expire this year, as per RBA data. For those in this category, it’s crucial to assess your home loan early to ensure it remains suitable for your needs.

What Happens When Your Fixed Rate Expires?

Typically, once your fixed-rate term ends, your home loan will revert to your lender’s standard variable rate. If this rate is higher than your fixed term rate, you could experience a significant increase in repayments.

Why Refinancing is Beneficial:

Refinancing offers numerous advantages, including:

  • Securing a more competitive home loan
  • Accessing features like offset accounts and redraw facilities to save on interest
  • Leveraging equity for property investment, renovations, or major purchases
  • Consolidating debt for improved budgeting and repayment management.

Ready to Explore Your Options?

If you’re nearing the end of your fixed-rate term, it’s wise to evaluate your options sooner rather than later.

As your mortgage and finance broker, we can assist you in assessing your repayment outlook upon transitioning from a fixed to a variable rate. Additionally, we may recommend strategies such as making extra repayments to prepare for the end of your fixed term.

In some cases, we may negotiate a better rate with your current lender or suggest alternative lenders offering more competitive home loan options tailored to your needs.

Don’t hesitate to reach out to us today for personalized guidance and support. We’re here to help you navigate the refinancing process effectively.