CHANGE IT UP

WITH some home loan rates dipping below 2 per cent, is the time right to refinance?

According to research by Finder, Aussies want the best of both worlds for their home loan interest rate.

A new survey of 1000 people by the comparison website looked at refinancing and found that one in five would opt for a split mortgage, dividing their loan into fixed and variable portions.

About 19 per cent would refinance to a variable loan, while 17 per cent said they would prefer to lock in their rate for a set period of time with a fixed-rate mortgage.

The remaining 43 per cent said they were unsure if they would opt for fixed or variable.

Finder insights manager Graham Cooke said fixed rate loans came with risks and benefits.

With the cash rate set to remain at 0.25 per cent for some time, he said it was unlikely the big banks would lower their standard variable mortgage rates any further for now.

“This means fixed rate loans are back in vogue,” he said.

“For some homeowners, locking in their rate for a year or more may offer greater savings than a variable rate would.

“We’re currently seeing rock-bottom rates across the board, with fixed rates as low as 1.95 per cent from Easystreet, and the lowest variable rate even lower at 1.89 per cent from Reduce Home Loans,” he said.

Graham said homeowners should consider their financial objectives before restructuring their loan.

He said there could be hefty financial penalties for breaking a fixed-rate loan early, so people should make sure this was something they were prepared to commit to for a one to five year period.

“Otherwise, a split loan or variable loan may be your safest bet,” he said.

The research found it was the younger generations who placed the most value on flexibility.

More than a quarter of Gen Z (27 per cent) would split their mortgage – more so than any other generation – while Millennials were the survey’s most likely to choose a variable loan (23 per cent). Baby Boomers surveyed were more likely to refinance to a fixed rate (19 per cent).

Reasons to consider splitting: