Why refinancing could be a strong new year’s resolution

January is historically a quiet time for refinancing, according to Money.com.au report. In fact, over the past five years, refinancing loans have averaged just 74 per cent of the typical monthly loan volume recorded throughout the year.

Mansour Soltani, home loan expert at Money.com.au, said that January is prime time for borrowers to organise a better deal while lenders are a little quieter than usual.

The festive summer months result in a ‘hibernation’ in the property market, said the report, which is why director of Klutch Finance Group, Todd Iljasov, said it’s a perfect time to refinance.

“For investors with equity, refinancing in January can free up cashflow and reduce repayments, creating additional borrowing power. This can give you a stronger bidding position when the property market heats up again and the right opportunity comes along,” he said.

Further, some lenders use this time of year to offer cashback incentives to start the year strong and bring in needed clients.

“We don’t advise refinancing for the sake of a cashback if the numbers don’t stack up, but if they do, and it aligns with your financial goals, it can be a great added bonus to kick off 2025 with extra cash,” said director of Headland Finance, Mitch Bath.

Bath also said that with many still on break throughout January, borrowers can take advantage of quicker turnaround times.

“With fewer applications coming through during the holiday period, banks can process loans much faster than usual, provided they’re not busy settling purchases from December,” he said.

With the report saying 46 per cent of Aussies recognise their mortgage as their most stressful debt, easing some pressure with tactical early-year decisions could be extremely beneficial.

People clearly feel the financial strain at this time of year, with Money.com.au saying that over the last five years, personal card use in December increased by 11 per cent compared to the monthly average for the rest of the year. This added up to an additional 28 million transactions or $2.3 billion above the average.

With interest rate drops still up in the air as to when they will occur, taking control of finances through some thoughtful refinancing could be the smartest way to begin 2025.

[Related: Help clients ‘regain control of their financial future’]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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