Fixed rate and refinancing trends brokers should expect in FY25

The volume of fixed-rate loans expiring is expected to hold steady for the remainder of 2024, while the proportion of refinancing loans of total applications has eased from more than 50 per cent in June 2023 to just over a third of all applications, according to research from Connective.

In comparison, the volume of fixed-rate loan expiries came close to a 70 per cent increase year on year as of January 2024, with an average increase of 45 per cent month on month from January to March.

Mark Haron, Connective’s executive director, has encouraged brokers to “get on the front foot” in regard to identifying where clients might need assistance in the coming months as “the lending environment is set to become trickier and the demand for refinancing will persist”.

“The release of the ABS’s June quarter CPI report next week will be a significant indicator of whether the RBA moves the cash rate in early August. We may see a situation where some home owners face mortgage rates that have tripled or quadrupled in just a couple of years,” Haron said.

“Borrowers are going to continue to search for better rates especially those still coming off fixed rates and about to experience hikes as severe as around 1.9 per cent to 6 per cent.

“It’s an opportunity for brokers to know who these clients are, reach them at scale and discuss refinancing before the banks or competitors are reaching out.”

According to a recent survey conducted by Finder, 27 per cent of those who have a mortgage are due to come off fixed rates over the next 12 months, equating to 891,000 borrowers still on a fixed-rate mortgage.

The research found that fixed-rate mortgage holders are set to roll on variable rates that could potentially be three times higher than the pandemic rates when the cash rate sat at 0.1 per cent.

The average mortgage holder is now paying almost $1,400 more in monthly payments following 13 interest rate increases since May 2022.

Uncertainty indeed seems to be the name of the game when it comes to the Reserve Bank of Australia (RBA) and potential movements in the cash rate.

With the August meeting coming up, a close eye is being placed on next week’s (31 July) CPI data that should give an indication of what the central bank will decide to do.

[RELATED: Rate hike would ‘offset the benefit’ of tax cuts]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.