Just as Google posts its yearly results for the most ‘searched term in 2022,’ an analysis by Great Southern Bank has revealed Google searches about interest rate rises increased by 750% over the past year.
Given there has been 300 basis points’ worth of tightening to the cash rate since May, a spike was also seen in searches regarding the RBA and home loans.
The top searched terms about home ownership in 2022 were:
- “Interest rate rise” - +750% YoY
- “RBA cash rate” - +500% YoY
- “RBA interest rate” - +300% YoY
- “Fixed rate home loans” - +150% YoY
- “Fixed interest rate home loan” - +100% YoY
With $117 billion in CommBank fixed-rate home loans set to expire in 2023, online search data found refinancing was a hot topic for many mortgage holders.
Yet, Great Southern Bank suggests the significant searches on refinancing may point to a lack of knowledge on how the refinancing process actually works.
Great Southern Bank Chief Customer Officer Megan Keleher said this year’s tough economic environment saw Aussies turn to Google for help.
“Rising interest rates and the increased cost of living have been affecting household budgets and driven more customers to seek options to save on their home loans,” Ms Keleher said.
“They’re using the internet to find out how much they can borrow, how to refinance, and what support may be available for first home buyers.
“Using tools like a refinance calculator can really help. Our data shows that applicants who use a calculator when submitting their application are four times more likely to get their loan approved.”
The top searched terms about refinancing in 2022 were:
- “Pay calculator” - increased by more than 5,000%
- “Borrowing capacity calculator” - increased by more than 5,000%
- “Fixed rate home loans” - +600% YoY
- “Borrowing power calculator” +190% YoY
- “LMI calculator” - +120% YoY
Read More: How to refinance your home loan
While Aussie mortgage holders are working out their next steps in the current environment, would-be buyers have put a halt to achieving the Great Australian dream.
New analysis from Experian revealed the number of mortgage applications dropped by more than 10% in the second quarter of 2022 compared to the same period last year.
The second quarter of 2022 incorporated the first two interest rate rises - May and June.
“Analysis of our bureau data tells us that monthly mortgage enquiries have tapered off this year from the highs of 2021,” said Charlotte Rankin, Experian Director of Client Advisory.
“There are many factors contributing to this including: overall property market corrections, cost of living increases driven by global inflation, as well as ongoing interest rate rises.”
See Also: Mortgage repayment calculator
What happens when your fixed rate loan is expiring
Borrowers who took advantage of ultra-low fixed rates during Covid-19 could be faced with significant repayment shock when their fixed period ends.
Here are the options to consider when your fixed rate loan expires - the three R’s.
Re-fix
Some lenders may allow you to fix the interest rate on your home loan once again.
Keep in mind that the new fixed rate will likely be different to your old fixed rate. Also remember that fixing could see you miss out on thousands of dollars saved should variable interest rates drop during your term. On the other hand, you may avoid future interest rate rises until your fixed term is complete.
Revert
Once the fixed period expires, the mortgage will likely revert to whatever the standard variable is that the lender offers. This tends to be higher than the discounted variable rate lenders may offer to attract new customers.
Refinance
This is when you choose to refinance your home loan with your existing lender or a new lender.
Refinancing with the same lender is also often called repricing.
If you would prefer more flexibility with the extra potential benefit of an offset account or redraw facility, you may consider refinancing and opting for a variable rate home loan or even a split loan.
You could also choose to fix your mortgage with another lender.
When refinancing with a new lender, you will need to fulfill the lender’s eligibility requirements (e.g. equity in the property), and likely pay the relevant fees and charges involved.
Read More: How to prepare if your fixed home loan rate is expiring
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.06% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 Star Customer Ratings |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% | Apply in minutes |
| Promoted | Disclosure | |||||||||
6.09% p.a. | 6.11% p.a. | $3,027 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure | ||||||||||
5.69% p.a. | 6.16% p.a. | $2,899 | Principal & Interest | Fixed | $0 | $530 | 90% |
| Promoted | Disclosure |
Image by Nathana Reboucas via Unsplash
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