Although the Reserve Bank of Australia (RBA) has cut the cash rate to a two-year low of 3.85% this month, according to the latest survey,As many as 70% of homeowners are still not ready to refinance, missing out on the opportunity to save thousands of dollars in interest.
Data released by a financial website shows that 45% mortgage holders have not yet decided whether to refinance this year, while another 25% are still waiting for more interest rate cuts before taking action. In contrast, only 30% are ready to switch to floating-rate, fixed-rate, or hybrid mortgage plans.
Experts warn: Not refinancing means paying a "loyalty tax"
Mortgage expert Debbie Hays bluntly stated that homeowners who haven't proactively refinanced in the past are likely still paying above-market interest rates. "Banks often offer more favorable rates to new customers, so existing customers who haven't proactively refinanced are essentially paying a loyalty tax," she said.
She pointed out that the most competitive floating-rate mortgage rate on the market has dropped to around 5.5%, and if your mortgage rate is still higher than this level, it means you may be paying a "bad interest rate."
The real benefit of refinancing early: savings can accumulate
Take a $600,000, 25-year mortgage as an example:
If the homeowner changes his mortgage from 6.0% to 5.75%, he can immediately save about $91 per month; if the RBA cuts another 0.5 percentage points in the future, the interest rate for those who change their mortgage early will drop to 5.25%, while those who remain at the same level can only drop to 5.5%.
Even though both benefit from the interest rate cut, those who refinance early can save about $91 more per month than those who do not refinance.The annual savings are as high as $3,240. In comparison, those who refinance later only save $2,160, a difference of $1,080..
Hong Kong residents buying Australian property should review their mortgage strategies
Observations indicate that many buyers from Hong Kong or Taiwan tend to remain “steadfast” after purchasing property in Australia, rarely proactively examining mortgage rate trends or refinancing opportunities. However, as the Australian interest rate cycle shifts,2025 may be the golden age for mortgage refinancing, homeowners should proactively contact their banks or mortgage brokers to review whether existing loan terms are still competitive.
Team recommendations:
Review interest rates every six months
Compare quotes from banks and non-bank institutions
Consider splitting loans into floating-rate and fixed-rate loans to balance risks
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