Key Points
- More Australians refinanced their homes in the March quarter compared to the December quarter.
- Changes to the cash rate can give borrowers more negotiating power with lenders looking to be competitive.
- The average loan size for owner-occupier dwellings dropped in the first three months of the year.
The number of Australians refinancing their home loans increased in the first quarter of the year, and now could be a great opportunity to consider your options, a finance expert says.
According to the Australian Bureau of Statistics (ABS), 65,030 home loans were refinanced between lenders in the March quarter, an increase of 5.1 per cent on the previous three months.
Sally Tindall, the data insights director at financial comparison website Canstar, said refinancing can become popular after an interest rate cut.
“We often see an uptick in refinancing after a cash rate cut. That’s why we saw this refinancing burden during the period of the 13 rate hikes when banks were fighting for your business,” she told SBS News.
“Some of that refinancing activity is likely as a result of that cash rate cut in February.”
The Reserve Bank of Australia (RBA) will meet again next Tuesday, where it will announce any changes to the 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 people, even in the first year or two, the savings you could potentially make would outweigh the effort and the cost of refinancing,” she said.
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 biggest change was in South Australia, which experienced a rise of 14.32 per cent, and at the opposite end of the scale loan sizes in the ACT rose by just 3.35 per cent.
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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