Welcome to the Friends with Money podcast, brought to you by Money Magazine, creating financial freedom for Australians since nineteen ninety nine.

Welcome to the Friends with Money podcast, brought to you by Money Magazine, creating financial freedom for Australians since nineteen ninety nine.

Hello and thanks for joining us for another episode of Friends with Money, money Magazine's podcast to help you earn, save, and achieve your financial goals. My name is Tom Watson, a senior journalist here at Money Magazine, and as always, it is a pleasure to be with you. Back in mid February, the RBA board made a move it hadn't made in over four years. It decided to cut into rates, not that I need to remind many of you listeners. As a result, the official cash rate is currently sitting at four point one zero percent. That is unless something utterly unexpected happens between recording and when this episode goes out, and if it does, I'm very sorry I have obviously jinxed us. Now. There are plenty of implications to the RBA's recent decision, but one of the major ones is the impact it will have on mortgage rates and obviously the millions of Australians who are currently paying off a loan. So on today's episode of Friends with Money, we are going to take a bit of a look at what's happened in the world of home loans in the weeks following that RBA decision. But we're also going to have a chat about refinancing. You know what's involved, how to do it, and how much homeowners with a mortgage may be able to save by doing so, because the fact of the matter is that while plenty of lenders have been reducing their rates in response to the recent RBA cut, not all interest rates are made equally, and on a debt as mammoth as a mortgage, even a small rate difference can have a big impact.

Hello and thanks for joining us for another episode of Friends with Money, money Magazine's podcast to help you earn, save, and achieve your financial goals. My name is Tom Watson, a senior journalist here at Money Magazine, and as always, it is a pleasure to be with you. Back in mid February, the RBA board made a move it hadn't made in over four years. It decided to cut into rates, not that I need to remind many of you listeners. As a result, the official cash rate is currently sitting at four point one zero percent. That is unless something utterly unexpected happens between recording and when this episode goes out, and if it does, I'm very sorry I have obviously jinxed us. Now. There are plenty of implications to the RBA's recent decision, but one of the major ones is the impact it will have on mortgage rates and obviously the millions of Australians who are currently paying off a loan. So on today's episode of Friends with Money, we are going to take a bit of a look at what's happened in the world of home loans in the weeks following that RBA decision. But we're also going to have a chat about refinancing. You know what's involved, how to do it, and how much homeowners with a mortgage may be able to save by doing so, because the fact of the matter is that while plenty of lenders have been reducing their rates in response to the recent RBA cut, not all interest rates are made equally, and on a debt as mammoth as a mortgage, even a small rate difference can have a big impact.

Right.

Right.

Oh, that's enough blathering from me. It is time to introduce our guests. So I'm very pleased to say it that joining us Stave for the very first time on Friends with Money is fined as head of consumer Research. Graham Cook Graham, Welcome to Friends with Money.

Oh, that's enough blathering from me. It is time to introduce our guests. So I'm very pleased to say it that joining us Stave for the very first time on Friends with Money is fined as head of consumer Research. Graham Cook Graham, Welcome to Friends with Money.

Good a Tom, how you're doing good to be here?

Good a Tom, how you're doing good to be here?

Ah, I'm very well, especially seeing that lovely Pella in the background of voscreen, which we kind of promise not to talk about. But there we go. Listeners. Listeners can paint a picture of what you are, what your recording room looks like. There, great, well, try and stay healthy at least, you know. No, it's very interesting Graham to tell us of what have we seen in the way of I guess a reaction from banks and other lenders to the RBA Board's right cut so far.

Ah, I'm very well, especially seeing that lovely Pella in the background of voscreen, which we kind of promise not to talk about. But there we go. Listeners. Listeners can paint a picture of what you are, what your recording room looks like. There, great, well, try and stay healthy at least, you know. No, it's very interesting Graham to tell us of what have we seen in the way of I guess a reaction from banks and other lenders to the RBA Board's right cut so far.

Yeah, it's been a really interesting couple of weeks actually in terms of ORBA just for one, in terms of media interest in it. I've been talking about RBA for ten years in Australia in the media and I've never seen as much interest as over the last couple of weeks. In the build up to this raycod. I've never done as many interviews. It's the people are chewing at the chewing at the bit what's the phrase. People have been very eager for this radcot massively, and in terms of the reaction from the banks, it's been really interesting because of all of this intense focus on a ray cup being required, because of all this intense focus on the cost of living, we've seen every single banker's announced to cut that I've seen pass on the full redcut to consumers, so all twenty five basis points, which I think is the first time at least since I've been working in this area that that's happened. Where every single bank has passed on the FOE cut, they usually some of them will keep a little bit back for themselves. So I think that just shows the kind of social pressure on banks to give some sort of relief to households who are feeling it hard because of the cost of the thing.

Yeah, it's been a really interesting couple of weeks actually in terms of ORBA just for one, in terms of media interest in it. I've been talking about RBA for ten years in Australia in the media and I've never seen as much interest as over the last couple of weeks. In the build up to this raycod. I've never done as many interviews. It's the people are chewing at the chewing at the bit what's the phrase. People have been very eager for this radcot massively, and in terms of the reaction from the banks, it's been really interesting because of all of this intense focus on a ray cup being required, because of all this intense focus on the cost of living, we've seen every single banker's announced to cut that I've seen pass on the full redcut to consumers, so all twenty five basis points, which I think is the first time at least since I've been working in this area that that's happened. Where every single bank has passed on the FOE cut, they usually some of them will keep a little bit back for themselves. So I think that just shows the kind of social pressure on banks to give some sort of relief to households who are feeling it hard because of the cost of the thing.

That's so interesting. In a formal life, I was even more involved in mortgages, and I remember, you know, covering other RBA cuts and those kind of you know, drips and drabs of announcements coming through and lend is kind of holding out for as long as possible or sometimes all together. So interesting to hear that, you know, that kind of social pressure, as you talked about, is obviously playing a role.

That's so interesting. In a formal life, I was even more involved in mortgages, and I remember, you know, covering other RBA cuts and those kind of you know, drips and drabs of announcements coming through and lend is kind of holding out for as long as possible or sometimes all together. So interesting to hear that, you know, that kind of social pressure, as you talked about, is obviously playing a role.

Yeah, well we all the interesting to see is where that this holds from here, you know, So like we've seen it this time. The last time we saw a series of redcuts, there was kind of four cuts in a row. On average, the banks passed on around eighty percent of the cut overall, right, So I don't know if we'll see the full rate cut passed on if the ORBA cuts again. So what's convenesting to see is if they do this again next time, or if they then start to pull a little back on themselves.

Yeah, well we all the interesting to see is where that this holds from here, you know, So like we've seen it this time. The last time we saw a series of redcuts, there was kind of four cuts in a row. On average, the banks passed on around eighty percent of the cut overall, right, So I don't know if we'll see the full rate cut passed on if the ORBA cuts again. So what's convenesting to see is if they do this again next time, or if they then start to pull a little back on themselves.

We'll have to keep tabs on that, and yes, call some lenders to account if they are if they don't do that down the drag. As I said before, Gram, I think many people, probably you know, appreciate that not all home loans have the same interest rate. There's obviously a real mix of offers out there on the market. So what kind of range are we talking about here? And I guess how much of an impact could this difference have when it comes to someone's mortgage repayments.

We'll have to keep tabs on that, and yes, call some lenders to account if they are if they don't do that down the drag. As I said before, Gram, I think many people, probably you know, appreciate that not all home loans have the same interest rate. There's obviously a real mix of offers out there on the market. So what kind of range are we talking about here? And I guess how much of an impact could this difference have when it comes to someone's mortgage repayments.

Well, the basis point cut itself, so they cut by twenty five basis points a quarter of a percent. For the average mortgage holder in Australia who has a mortgage of about six hundred and forty k, that'll result in one hundred dollars a month in savings twelve hundred dollars over the course of a year. It's not huge, but it's a step of the right direction for most households. The thing is, though, you could often get that kind of saving or more by looking at refinancing your loan rather than sticking with the individual lender that you have.

Well, the basis point cut itself, so they cut by twenty five basis points a quarter of a percent. For the average mortgage holder in Australia who has a mortgage of about six hundred and forty k, that'll result in one hundred dollars a month in savings twelve hundred dollars over the course of a year. It's not huge, but it's a step of the right direction for most households. The thing is, though, you could often get that kind of saving or more by looking at refinancing your loan rather than sticking with the individual lender that you have.

So looking at eight in the market right now the kind of best rate.

So looking at eight in the market right now the kind of best rate.

The average outstanding unoccupier rate from the RBA was six point one before the cash rated, so applying the full twenty five off, that would make it five point eighty five as the kind of a good rate in the market right now. The lowest rate in the market right now when I checked as of this morning, this could change later on today is GENC Mutual will have a rate of five point five to nine, So that's essentially another basis point cut off a good rate in the market. So if you were theory to move the GENC mutual, you could get two rate cuts in one go.

The average outstanding unoccupier rate from the RBA was six point one before the cash rated, so applying the full twenty five off, that would make it five point eighty five as the kind of a good rate in the market right now. The lowest rate in the market right now when I checked as of this morning, this could change later on today is GENC Mutual will have a rate of five point five to nine, So that's essentially another basis point cut off a good rate in the market. So if you were theory to move the GENC mutual, you could get two rate cuts in one go.

It's obviously a couple of thousand dollars a year, that would say based on that.

It's obviously a couple of thousand dollars a year, that would say based on that.

Yeah, yeah, that would say.

Yeah, yeah, that would say.

And obviously you'd save an awful lot more if you're on a bigger mortgage.

And obviously you'd save an awful lot more if you're on a bigger mortgage.

This is a six hundred and forty day mortgage.

This is a six hundred and forty day mortgage.

Anyone who bought recently or bought in one of the big capitals will be on a you know, often a significantly bigger mortgage than that, so they're due to make bigger savings. And that's only if you're coming off five point a five. A lot of people will be on higher rates than that to the standard variables form. The big banks are significantly hard on that right.

Anyone who bought recently or bought in one of the big capitals will be on a you know, often a significantly bigger mortgage than that, so they're due to make bigger savings. And that's only if you're coming off five point a five. A lot of people will be on higher rates than that to the standard variables form. The big banks are significantly hard on that right.

Now, Yes, I can imagine they are. Gram You mentioned the word refinancing there, and that kind of segues us very nicely onto our kind of main topic for today, which is refinancing before we dive in. Though sometimes I think we assume that everyone knows what a particular term means, and you know, possibly a lot of listeners do. But when we talk about refinancing in very simple terms, what are we talking about?

Now, Yes, I can imagine they are. Gram You mentioned the word refinancing there, and that kind of segues us very nicely onto our kind of main topic for today, which is refinancing before we dive in. Though sometimes I think we assume that everyone knows what a particular term means, and you know, possibly a lot of listeners do. But when we talk about refinancing in very simple terms, what are we talking about?

So it's basically just moving your business from one bank to another. You're taking the debt that you're paying back to your bank and they'll another bank will buy that, they will pay off your home lone essentially what the bank you're currently with, and your loan will move to a new bank.

So it's basically just moving your business from one bank to another. You're taking the debt that you're paying back to your bank and they'll another bank will buy that, they will pay off your home lone essentially what the bank you're currently with, and your loan will move to a new bank.

And it used to be kind of tricky to do this in the market.

And it used to be kind of tricky to do this in the market.

There used to be a fair bit of a work involved from the consumers perspective, but nowadays it's relatively straightforward. You generally just have to find the better product that you want to move to, and they'll handle everything with your current bank and move your kind of loan across. So it's actually relatively straightforward process and a good way to save that a lot of people kind of think it might be more hassled than actually it tends to be noticed.

There used to be a fair bit of a work involved from the consumers perspective, but nowadays it's relatively straightforward. You generally just have to find the better product that you want to move to, and they'll handle everything with your current bank and move your kind of loan across. So it's actually relatively straightforward process and a good way to save that a lot of people kind of think it might be more hassled than actually it tends to be noticed.

Well. That that brings us very nicely to one of the questions I had before we kind of dive into refancing a little bit more, which is, you know what, if you actually really like your current lender, you know what, if you have all your banking products with that particular end, or really like the way that your mortgage it is structured, is there, you know, any potential to negotiate with them to get a better rate or is that just you know, a fascal idea.

Well. That that brings us very nicely to one of the questions I had before we kind of dive into refancing a little bit more, which is, you know what, if you actually really like your current lender, you know what, if you have all your banking products with that particular end, or really like the way that your mortgage it is structured, is there, you know, any potential to negotiate with them to get a better rate or is that just you know, a fascal idea.

No, I think that is actually a good question.

No, I think that is actually a good question.

That's actually that should be your first port of call before you look at refinancing. You should reach out to your bank that you're currently with and see if you can get a better deal. So the best thing to do is probably first of all, look at the market, jump onto your comparicony site like finder, see what the lowest rates available are. Then call your bank and say I have the option to move to this rate and see what they can do, and usually they will be willing to do.

That's actually that should be your first port of call before you look at refinancing. You should reach out to your bank that you're currently with and see if you can get a better deal. So the best thing to do is probably first of all, look at the market, jump onto your comparicony site like finder, see what the lowest rates available are. Then call your bank and say I have the option to move to this rate and see what they can do, and usually they will be willing to do.

Something to keep you on board. As a customer.

Something to keep you on board. As a customer.

Because of all of this, all of these cash right movements, that competition is really fierce in the market right now, so banks are fighting with each other to get a new customer on board, and they don't want to be simultaneously losing customers in this kind of high focus environment. So best thing to do to start with your current lender and see what they'll do, and often they will. The rate that I'm paying with my bank, for example, is below the rate advertised on their website because I was able to negotiate slightly got of deal, So it's definitely worth starting there. But if they don't budge, then it's time to start looking at other options.

Because of all of this, all of these cash right movements, that competition is really fierce in the market right now, so banks are fighting with each other to get a new customer on board, and they don't want to be simultaneously losing customers in this kind of high focus environment. So best thing to do to start with your current lender and see what they'll do, and often they will. The rate that I'm paying with my bank, for example, is below the rate advertised on their website because I was able to negotiate slightly got of deal, So it's definitely worth starting there. But if they don't budge, then it's time to start looking at other options.

Oh well, that's great now that you've managed to do it yourself, then Graham, hopefully they give people a little bit of inspiration. Gives me a bit of inspiration. Actually, I'll have to go and put the squeeze on my bank after our call.

Oh well, that's great now that you've managed to do it yourself, then Graham, hopefully they give people a little bit of inspiration. Gives me a bit of inspiration. Actually, I'll have to go and put the squeeze on my bank after our call.

D Yeah, I mean, it never hurts to ask.

D Yeah, I mean, it never hurts to ask.

I've been an interesting home mortgage journey over the last few years, actually because I bought my house a few years ago, but as soon as the cash rights started to rise around the time, so we do an orbit a cash right survey. I find out what we serve ay economists and ask them what the cash rate is going to do. And around the time when it became clear the cash right was going to start rising because inflation was increasing, I actually contacted my bank and paid to break my fixed loans. I had to fixed learn at a certain rate. I paid to break that to get to a lower rate and lock.

I've been an interesting home mortgage journey over the last few years, actually because I bought my house a few years ago, but as soon as the cash rights started to rise around the time, so we do an orbit a cash right survey. I find out what we serve ay economists and ask them what the cash rate is going to do. And around the time when it became clear the cash right was going to start rising because inflation was increasing, I actually contacted my bank and paid to break my fixed loans. I had to fixed learn at a certain rate. I paid to break that to get to a lower rate and lock.

It in for four years.

It in for four years.

I think it cost me at the time four grand or something like that to lock in one point eight nine percent before the cash lads started to rise, and I was worried that I was spending too much and that was going to be a waste of money. But nobody foresaw how many cash rate increases we were going to get. And within two years I was saving that amount of money every two months. So definitely, you know, having a bit of taking a risk, sometimes having a bit of ford thinking, doing a bit of homework can save.

I think it cost me at the time four grand or something like that to lock in one point eight nine percent before the cash lads started to rise, and I was worried that I was spending too much and that was going to be a waste of money. But nobody foresaw how many cash rate increases we were going to get. And within two years I was saving that amount of money every two months. So definitely, you know, having a bit of taking a risk, sometimes having a bit of ford thinking, doing a bit of homework can save.

You in the long run.

You in the long run.

I'm very jealous, very jealous.

I'm very jealous, very jealous.

I don't think it's just gone off to six percent now.

I don't think it's just gone off to six percent now.

So it expired in January, So you know, I want to say about as everybody else now.

So it expired in January, So you know, I want to say about as everybody else now.

You're back in the pack. Yes, Gray, let's get back on to refinancing then. So for you know, people that you know do want to go down the refinancing track that they haven't had any success with their existing lender or just don't even want to try beyond kind of I guess, establishing what their rate is and maybe you know, comparing it to you know, other rates on the market, how else should they start to prepare?

You're back in the pack. Yes, Gray, let's get back on to refinancing then. So for you know, people that you know do want to go down the refinancing track that they haven't had any success with their existing lender or just don't even want to try beyond kind of I guess, establishing what their rate is and maybe you know, comparing it to you know, other rates on the market, how else should they start to prepare?

So the first thing to do is know the situation that you're coming from if you're going to look at refinancing, So now your financial position, look at your income, look at your expenditure. Have all that information ready because that is the type of information that a new lender is going to ask for when you move across. But also have a think about the things that are important to you aside from just the interest rates. So you'll see a lot of smaller lenders have really really good interest rates, but they don't necessarily have some of the extras that come with the big banks, like offset accounts and things like customer service can be big, you know. So for example, when I was getting my homeland, initially I was looking at one of the smaller lenders, but trying to arrange the home loan. Every time I had to call and speak to a new person, you'd be on hold for an hour and a half.

So the first thing to do is know the situation that you're coming from if you're going to look at refinancing, So now your financial position, look at your income, look at your expenditure. Have all that information ready because that is the type of information that a new lender is going to ask for when you move across. But also have a think about the things that are important to you aside from just the interest rates. So you'll see a lot of smaller lenders have really really good interest rates, but they don't necessarily have some of the extras that come with the big banks, like offset accounts and things like customer service can be big, you know. So for example, when I was getting my homeland, initially I was looking at one of the smaller lenders, but trying to arrange the home loan. Every time I had to call and speak to a new person, you'd be on hold for an hour and a half.

It was just a I didn't want, you know, forty years of this kind of customer service.

It was just a I didn't want, you know, forty years of this kind of customer service.

So I ended up going with one of the big banks because they answered the phone pretty much visually. So those kind of things you want to factor in how important those things are to you, as well as just getting the cheapest rate before for you make your decision. But no, no, as much as you kind of make yoursel phone and kind of know what you want is the good thing to do when you starty.

So I ended up going with one of the big banks because they answered the phone pretty much visually. So those kind of things you want to factor in how important those things are to you, as well as just getting the cheapest rate before for you make your decision. But no, no, as much as you kind of make yoursel phone and kind of know what you want is the good thing to do when you starty.

I think that's a really excellent point. I think before I took out a mortgage myself, I would have been, you know, recept with the idea that I would have gone with almost anyone if I get the cheaper rate. But now that I have one, and I can see the benefit of an offset account and multiple offset accounts, actually I think I'd very much like to keep those, So I would have to find another lender that kind of offered that same level of flexibility when it came to offsets, as well as a decent rate as well, So that would that would limit my options.

I think that's a really excellent point. I think before I took out a mortgage myself, I would have been, you know, recept with the idea that I would have gone with almost anyone if I get the cheaper rate. But now that I have one, and I can see the benefit of an offset account and multiple offset accounts, actually I think I'd very much like to keep those, So I would have to find another lender that kind of offered that same level of flexibility when it came to offsets, as well as a decent rate as well, So that would that would limit my options.

Offsets are are really key, especially in this current market. So when I moved to the high interest rate in January, I used to have multiple different savings accounts because I find a we monitor all the right so I do what the best rate. Well, so I'd move money around to whatever the best savings account was because they are all sevens against don't cost any money. Ce may as well have six of them, doesn't affect you, just move your money around.

Offsets are are really key, especially in this current market. So when I moved to the high interest rate in January, I used to have multiple different savings accounts because I find a we monitor all the right so I do what the best rate. Well, so I'd move money around to whatever the best savings account was because they are all sevens against don't cost any money. Ce may as well have six of them, doesn't affect you, just move your money around.

I was doing that, but.

I was doing that, but.

Now that I've moved on to a high variable rate, I've moved all of my savings into the offset account because the offset account is offsetting nearly six percent interest in the mortgage rather than earning five percent interest as savings. But on top of that, you have to pay tax on the savings that you make in your savings account that is extra with your mortgage. So if you have an upset account right now and you have a high variable rate, keeping money in there is going to benefit you more than having gain insight.

Now that I've moved on to a high variable rate, I've moved all of my savings into the offset account because the offset account is offsetting nearly six percent interest in the mortgage rather than earning five percent interest as savings. But on top of that, you have to pay tax on the savings that you make in your savings account that is extra with your mortgage. So if you have an upset account right now and you have a high variable rate, keeping money in there is going to benefit you more than having gain insight.

We could almost do an entire episode on our set accounts, so I think maybe we will. Maybe we'll have to get you back onto to that because it definitely a topical talking about es. So when it comes to I guess that the kind of practical side of refiancy in ingram, what are people's options? Can they do it themselves? Will they have to do it through a mortgage broker? I guess what are the options here for people and what are some of the kind of I guess the pros or cons involved with with those various options.

We could almost do an entire episode on our set accounts, so I think maybe we will. Maybe we'll have to get you back onto to that because it definitely a topical talking about es. So when it comes to I guess that the kind of practical side of refiancy in ingram, what are people's options? Can they do it themselves? Will they have to do it through a mortgage broker? I guess what are the options here for people and what are some of the kind of I guess the pros or cons involved with with those various options.

Yeah, those are basically the two routes. So you can go directly to a lender, or you can go via a mortgage broker. The mortgage brokers will we'll have relationships with the banks and can negotiate on your behalf rather than you have to negotiate yourself, and you can go through them.

Yeah, those are basically the two routes. So you can go directly to a lender, or you can go via a mortgage broker. The mortgage brokers will we'll have relationships with the banks and can negotiate on your behalf rather than you have to negotiate yourself, and you can go through them.

So they're kind of two options.

So they're kind of two options.

Some people like to go through your mortgage broke because there's a little bit less hassle involved than just doing yourself. But you can sometimes get a better deal giving it yourself, So maybe both are worth exploring.

Some people like to go through your mortgage broke because there's a little bit less hassle involved than just doing yourself. But you can sometimes get a better deal giving it yourself, So maybe both are worth exploring.

Before you look at the mortgage.

Before you look at the mortgage.

Broker, maybe jump online and see what low rates in the market look like right now, so when you contact the mortgage broker, you know whether they're coming back to you with a good rate. I personally have been going directly to lenders myself, but mortgage brokers are pretty properlar in Australia because they make it an awful lot easier and they kin go say for you.

Broker, maybe jump online and see what low rates in the market look like right now, so when you contact the mortgage broker, you know whether they're coming back to you with a good rate. I personally have been going directly to lenders myself, but mortgage brokers are pretty properlar in Australia because they make it an awful lot easier and they kin go say for you.

Yeah, So I guess it just depends on I guess you're maybe level of comfort and negotiating, your level of expertise and your knowledge you know about you know, the various options in the market, how comfortable you are approaching you know, lenders and potentially doing itself. So it's really kind of an individual choice at the end of the day. Yeah.

Yeah, So I guess it just depends on I guess you're maybe level of comfort and negotiating, your level of expertise and your knowledge you know about you know, the various options in the market, how comfortable you are approaching you know, lenders and potentially doing itself. So it's really kind of an individual choice at the end of the day. Yeah.

Yeah, there's two very different ways of going about the same thing, so it's kind of up to you which way you want to go. But being aware of what the rates look like in the market from the beginning of either position really gives you the edge.

Yeah, there's two very different ways of going about the same thing, so it's kind of up to you which way you want to go. But being aware of what the rates look like in the market from the beginning of either position really gives you the edge.

No, excellent point. G We've touched on. I guess how people can prepare to refinance and that options for refinancing, whether it's going alone or going with the broker. But is there anything else that would be refinances will want to think about or prepare along the way that we haven't already touched on.

No, excellent point. G We've touched on. I guess how people can prepare to refinance and that options for refinancing, whether it's going alone or going with the broker. But is there anything else that would be refinances will want to think about or prepare along the way that we haven't already touched on.

Yeah, I mean there are some situations when refinancing won't work for you. So anyone who's in negative equity for example. There won't be a lot of people like this in Australia right now. But if someone takes out a mortgage, for example, with a low deposit, say a five percent deposit, and then the house prices in their area dropped by five percent, it means they owe the bank more money than the house is worth. That makes it very difficult to refinance. Things that will make it difficult to refinance as well are things like your credit score. So actually before you begin this journey to go to deal to check what your credits bred. So your credit score is awarded by one of three credit score bodies in Australia and it looks like your credit history and gives you a score out of a thousands to tell banks how reliable you would be to lend to and that score will determine how many homelands you can apply for and often determine the rates you can get.

Yeah, I mean there are some situations when refinancing won't work for you. So anyone who's in negative equity for example. There won't be a lot of people like this in Australia right now. But if someone takes out a mortgage, for example, with a low deposit, say a five percent deposit, and then the house prices in their area dropped by five percent, it means they owe the bank more money than the house is worth. That makes it very difficult to refinance. Things that will make it difficult to refinance as well are things like your credit score. So actually before you begin this journey to go to deal to check what your credits bred. So your credit score is awarded by one of three credit score bodies in Australia and it looks like your credit history and gives you a score out of a thousands to tell banks how reliable you would be to lend to and that score will determine how many homelands you can apply for and often determine the rates you can get.

Not just that, but sevens against credit and all that stuff as well.

Not just that, but sevens against credit and all that stuff as well.

So checking your credit score before you start would be a good kind of thing to look at. You can do that for free on find there, and there's multiple places you can do as well.

So checking your credit score before you start would be a good kind of thing to look at. You can do that for free on find there, and there's multiple places you can do as well.

But that's a good thing to.

But that's a good thing to.

Know because the higher that is, the more bargaining payer you have when you do start the refinancing journey.

Know because the higher that is, the more bargaining payer you have when you do start the refinancing journey.

And one final kind of myths of a well, maybe it's not a myth. Maybe it's just something that's worth addressing as a point that you've already done yourself, Graham, and that that's breaking, you know, a fixed loan in order to refinance with that with a different lender and what I assume was a better rate or a better outcome for you. So that is a possibility. Then that's not just something that people should necessarily rule out out of hand if they are on a fixed rate.

And one final kind of myths of a well, maybe it's not a myth. Maybe it's just something that's worth addressing as a point that you've already done yourself, Graham, and that that's breaking, you know, a fixed loan in order to refinance with that with a different lender and what I assume was a better rate or a better outcome for you. So that is a possibility. Then that's not just something that people should necessarily rule out out of hand if they are on a fixed rate.

I think in the time when I did that, it was something worth looking at in an environment where we're expecting the rate to fall, which is.

I think in the time when I did that, it was something worth looking at in an environment where we're expecting the rate to fall, which is.

Kind of where we are now.

Kind of where we are now.

So our panel of economists are expecting a couple of rate rises this year. I know the RBA came out and said don't expect anymore after this one. Generally economists are still predicting a couple of because you may make yeah, yeah, and an environment like that, genuinely locking into a fixed rate loan doesn't make sense because the rate is going to drop and could get lower than it is now by the end of the loan, So there are some fixed right loans that'll be significantly lower than the variable rate that's being offered. And if you think the rate isn't going to drop as much, if you think Trump's terarrists, for example, are going to actually push up inflation, then this might be the last right cup we see for well, then that might be something worth looking at. But in an environment where the rates likely to drop further and inflation is under control, maybe be cautious. But if you're on a fixed rate that is not good value, you know, and you can get a better deal, it might be worth paying that breaking fee to do so, but you really need to kind of know what you're doing.

So our panel of economists are expecting a couple of rate rises this year. I know the RBA came out and said don't expect anymore after this one. Generally economists are still predicting a couple of because you may make yeah, yeah, and an environment like that, genuinely locking into a fixed rate loan doesn't make sense because the rate is going to drop and could get lower than it is now by the end of the loan, So there are some fixed right loans that'll be significantly lower than the variable rate that's being offered. And if you think the rate isn't going to drop as much, if you think Trump's terarrists, for example, are going to actually push up inflation, then this might be the last right cup we see for well, then that might be something worth looking at. But in an environment where the rates likely to drop further and inflation is under control, maybe be cautious. But if you're on a fixed rate that is not good value, you know, and you can get a better deal, it might be worth paying that breaking fee to do so, but you really need to kind of know what you're doing.

So, Graham, one final question I had, and it relizs some of you talked about it already, which is the idea of future rate cuts later in the year. You know, what's the kind of expectations around those, And I guess how should people I guess prepare potentially for those or react to the you know, the current cuation that we're in after the ABBA is cut in February.

So, Graham, one final question I had, and it relizs some of you talked about it already, which is the idea of future rate cuts later in the year. You know, what's the kind of expectations around those, And I guess how should people I guess prepare potentially for those or react to the you know, the current cuation that we're in after the ABBA is cut in February.

Yeah, good questions.

Yeah, good questions.

I'm actually because because your reaction to this cut will determine potentially whether we get any more cuts. So the reason the OBA has cut is because the inflation number in Australia has come down to within target between two and three percent.

I'm actually because because your reaction to this cut will determine potentially whether we get any more cuts. So the reason the OBA has cut is because the inflation number in Australia has come down to within target between two and three percent.

I think it's two point four at the moment.

I think it's two point four at the moment.

Trimmed mean inflation, which is another inflation figure which takes out the bouncy numbers and gets the underlying kind of core inflation, that's a three point two, So that's slightly above the target. So inflation is looking good, but it's not perfect. If does inflation numbers start to go up in any form, that will make the RBA very courtious about issuing any more rate cuts this year. So inflation needs to stay low for records to come, and that means how people spend the rate cuts they've currently got will make a difference. So you're going to get a one hundred dollars off your home loan and from those current rate cut you could take that out, you could spend it, you could say that you could invest it.

Trimmed mean inflation, which is another inflation figure which takes out the bouncy numbers and gets the underlying kind of core inflation, that's a three point two, So that's slightly above the target. So inflation is looking good, but it's not perfect. If does inflation numbers start to go up in any form, that will make the RBA very courtious about issuing any more rate cuts this year. So inflation needs to stay low for records to come, and that means how people spend the rate cuts they've currently got will make a difference. So you're going to get a one hundred dollars off your home loan and from those current rate cut you could take that out, you could spend it, you could say that you could invest it.

The best thing to.

The best thing to.

Do probably is leave it in your home and keep your repayments where they are and don't reduce them if you can afford to, because that will shape a better year off your home loan, so that's beneficial. But also I'll mean it's let your less likely to push up inflation, and it means more acuts are more likely to come further.

Do probably is leave it in your home and keep your repayments where they are and don't reduce them if you can afford to, because that will shape a better year off your home loan, so that's beneficial. But also I'll mean it's let your less likely to push up inflation, and it means more acuts are more likely to come further.

Than the line, which I think is what everybody wants.

Than the line, which I think is what everybody wants.

It's a really interesting perspective. I will have to have to take that into account when Lendo passes on that can't or hopefully does in the next couple of days. Graham, I could talk about home loans all day, obviously, I think that's pretty clear at this point, but we've covered off so much ground today so we best leave it there. Thank you so much for your time for joining us. It's been a pleasure having you on the podcast at long last.

It's a really interesting perspective. I will have to have to take that into account when Lendo passes on that can't or hopefully does in the next couple of days. Graham, I could talk about home loans all day, obviously, I think that's pretty clear at this point, but we've covered off so much ground today so we best leave it there. Thank you so much for your time for joining us. It's been a pleasure having you on the podcast at long last.

Thank you, tom No.

Thank you, tom No.

We've talked in writing articles a few times, so it's good to be on the podcast that's out with you directly.

We've talked in writing articles a few times, so it's good to be on the podcast that's out with you directly.

Lots of fun and look before to doing again.

Lots of fun and look before to doing again.

Absolutely, that's it for this episode of the Friends of Money podcast. But don't forget to jump on our website moneymag dot com dot au for your daily dose of financial news, or you can go grabe yourself a copy of the Lady's edition of Money Magazine in all good news agents. As always, Friends of Money will be right taking your podcast feed next week, so until then, my name is Tom Watson. Goodbye for now.

Absolutely, that's it for this episode of the Friends of Money podcast. But don't forget to jump on our website moneymag dot com dot au for your daily dose of financial news, or you can go grabe yourself a copy of the Lady's edition of Money Magazine in all good news agents. As always, Friends of Money will be right taking your podcast feed next week, so until then, my name is Tom Watson. Goodbye for now.

Thanks for listening to the Friends with Money podcast. For credible, independent and easy to understand financial commentary, visit moneymag dot com au. Please remember that the views and opinions expressed in this podcast are general in nature and further independent advice and research based on your personal circumstances should be sought before making an investment decision

Thanks for listening to the Friends with Money podcast. For credible, independent and easy to understand financial commentary, visit moneymag dot com au. Please remember that the views and opinions expressed in this podcast are general in nature and further independent advice and research based on your personal circumstances should be sought before making an investment decision