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Interest rates pause: Here’s why you shouldn’t

The RBA has warned more rate rises are on the horizon.

A composite image of RBA governor Philip Lowe and Australian money to represent the cost of higher interest rates.
Interest rates on pause is the perfect opportunity to refinance your home loan. (Source: Getty)

The Reserve Bank of Australia (RBA) kept the official interest rate on hold at 3.6 per cent at this month's board meeting, but that doesn’t mean there won’t be another rise in the coming months.

This was the first time the RBA hit the pause button on rate increases since April last year. But many borrowers are already feeling the burden of higher interest rates and are yet to feel the full effect of all 10, as interest rate hikes typically take two to three months to hit people’s bank accounts.


So, what should you do now to make the most of the rate pause?

It’s time to get a better deal

Borrowers are being urged to use this pause to get themselves a better deal on their home loan.

New analysis from found the average home-owner who hadn’t bargained for a better deal was paying around 6.36 per cent on their home loan. However, there are seven lenders offering variable rates under 5 per cent.

Banks are also throwing a huge range of perks at the feet of borrowers willing to switch lenders, including:

  • 32 lenders offering cashback deals, including all Big Four banks, primarily for refinancers

  • Two lenders offering frequent flyer points

  • Two lenders offering loyalty discounts

Plus some lenders are even offering rate discounts and fee-waivers for new customers.

You could save up to $12,000

If someone with a $500,000 debt today and 25 years remaining on their loan refinanced from the average variable rate to one of the lowest in the market, RateCity estimated they could save up to $12,396 in the next two years.

This includes the costs of refinancing and assumes the cash rate will hit around 4 per cent.

Potential savings by refinancing

Loan size

Change in current monthly repayments

Savings over next 2 years










RateCity research director Sally Tindall said if you hadn’t had the time to look at potentially switching loans, the upcoming long weekend was the best time to start.

“The RBA might have hit pause, but borrowers should do the exact opposite. If you haven’t negotiated your home loan recently, use the Easter break to get yourself a better deal,” Tindall said.

“While CBA, NAB and ANZ have scaled back their new-customer discounts in the last three weeks, the market is still incredibly competitive for borrowers looking to switch, particularly if they’re willing to go beyond these big banks.

“With just under $20 billion worth of loans up for grabs every single month, most lenders are climbing over each other to win a decent slice of the refinancing pie.”

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