Experts reveal what makes this month an ideal time to explore refinancing options
January presents a strong opportunity for Australian homeowners to refinance their mortgages, according to industry experts, as lenders are typically quieter but still eager to attract business.
Historical data shows that January refinancing activity averages just 74% of the typical monthly loan volume recorded throughout the year, creating a less competitive environment for borrowers.
Mansour Soltani (pictured above left), home loans expert at Money.com.au, says the start of the year is an ideal time for Australians to review major expenses like their mortgage.
“January is a time when people reassess their family budgets, and with it traditionally being a quieter month for home lending, it’s the perfect opportunity to negotiate a better deal while lenders are motivated to attract new customers,” Soltani said.
Many Australians include financial goals in their New Year’s resolutions, making January a natural time to review home loan costs. According to a survey by Money.com.au, 46% of respondents said their mortgage is their most stressful debt. For those seeking financial relief, refinancing to lower monthly repayments may ease stress and create a more manageable budget.
Despite the Reserve Bank of Australia keeping the cash rate unchanged for over a year, shifts in interest rates could work in borrowers’ favour. Owner-occupied fixed rates for terms under three years have fallen by 35 basis points in the past 12 months, though variable rates have slightly increased by 0.01% over the same period.
The festive season often leads to increased credit card use, with personal card transactions in December rising 11% above the monthly average over the past five years. This equates to an additional $2.3 billion in spending.
Homeowners carrying high-interest debt after the holidays may consider consolidating these balances into their home loan. Rolling credit card and personal loan debts into a mortgage can lower overall interest costs and streamline repayments.
Mitch Bath (pictured above centre), director of Headland Finance, says January’s lighter application volumes can result in quicker bank processing times.
“With fewer applications during the holiday period, banks can process loans faster, provided they’re not busy settling purchases from December,” Bath said.
Refinancing in January could also offer borrowers the chance to benefit from cashback incentives. Some lenders continue to provide cashbacks of up to $4,000 for refinanced loans, which could be particularly helpful after the expense-heavy holiday period.
“We don’t advise refinancing just for the sake of a cashback unless it aligns with your financial goals,” Bath said. “But if the numbers work, it’s a welcome bonus to start the year.”
The property market typically slows during December and January as listing volumes decline. However, refinancing early in the year can position investors for opportunities when the market picks up again in February and late summer.
Todd Iljasov (pictured above right), director of Klutch Finance Group, says refinancing can improve cashflow and borrowing power for those looking to invest.
“For investors with equity, refinancing in January can reduce repayments and free up additional borrowing power,” Iljasov said. “This can strengthen your bidding position when the property market heats up again.”
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