With the Reserve Bank delivering its third official cash rate cut this year, many Australians are taking a fresh look at their home loan options.
RBA lowered the cash rate by 25 basis points at its August meeting, bringing it down to 3.60% from 3.85%. The move followed confirmation that inflation is easing – with annual CPI now at 2.1% – and unemployment holding at historically low levels around 4.2%. The board said moderating price pressures and a resilient labour market gave it room to act, while cautioning that global uncertainty still looms.
According to Shannon McMahon (pictured), managing director of home loans at ANZ, “With home loan rate reductions becoming a reality in early 2025, ANZ saw a steady rise in refinancing activity with volumes increasing around 20-30% versus this time last year.
“With lower interest rates, we have forecast that this elevated refinance activity will continue.”
While securing a lower interest rate is a major motivator, McMahon urges borrowers to look beyond just the headline rate.
“While a lower rate is a great incentive, it’s not the only factor to consider when refinancing,” he said.
Other important considerations include:
Loan features: “Some customers may want an offset account, the ability to redraw or flexible repayment options.”
Fees and costs: “Additional charges like break costs, application fees, or valuation charges should be considered alongside the interest rate.”
Financial goals: “Customers come to us at all stages of their lives and finances, while some will be looking to consolidate debt, others may want to shorten the term of their loan.”
Market outlook: “It’s helpful to understand what analysts are predicting for future rate increases or decreases.”
One of the most common questions mortgage brokers and lenders hear is whether to choose a fixed or variable rate.
“The answer isn’t always straight forward. It depends on your personal circumstances, risk appetite, and financial goals,” McMahon said.
“Choosing the right home loan structure, whether fixed, variable, or a combination of both, can have a big impact on your financial flexibility and long-term goals, which is why we’d always recommend speaking with your lender or broker to find out what works best for you.”
With refinancing activity at record highs and more clients seeking advice, mortgage brokers play a critical role in helping borrowers compare options, understand features, and make informed decisions that support both immediate needs and long-term financial goals.
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