Should You Refinance Before or After a Rate Drop? Here’s the Truth
If you’ve been watching the news or checking your bank app lately, you’ll know interest rates are top of mind for many Aussies. With experts predicting a rate drop soon, the big question is: should you refinance your home loan now, or wait?
Here’s what we tell our clients – it depends on your situation. Let’s explore the key things to consider before making a move.
1. Are You on a Variable or Fixed Rate?
Understanding your current loan type is step one:
Variable rate: You’re already riding the ups and downs of the market. Refinancing now could help you lock in a better deal or get features like an offset account to reduce interest.
Fixed rate: If your term is ending soon, refinancing before your loan “reverts” to a higher variable rate can save you thousands. We can even set this up in advance so it kicks in the day your fixed period ends.
2. Waiting Could Cost You
Many people think “I’ll wait until rates drop and then refinance.” But here’s the thing: waiting doesn’t guarantee a better deal. In fact, by switching now, you might:
Move to a more competitive rate than your current lender’s variable option
Get a cashback offer (yes, some lenders still offer $1,000–$2,000 to switch)
Unlock better loan features or access equity for renos, investing or debt consolidation
Even if rates drop later, the cost of waiting could outweigh the short-term savings.
3. Rate Cuts Don’t Always Mean Lower Repayments
It’s easy to assume that a Reserve Bank rate cut = lower repayments. But in reality, lenders don’t always pass on cuts in full – and they can be slow to do it. By the time they adjust, you might still be paying more than you could have by switching lenders.
We help clients compare rates, fees and features across dozens of banks – not just your current one.
4. Refinancing Takes Time
Refinancing isn’t instant – it can take 2–4 weeks from application to settlement. If a rate drop does happen, you’ll still need to go through the process. Getting prepped now means you can strike while the iron’s hot.
💡 Our advice? Let us do a free loan review. If refinancing now makes sense, you’ll start saving right away. If not, we’ll set up a strategy so you’re ready when the time is right.
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