to another lender because rising rates, falling prices and a mandatory borrower “stress test” mean they do not qualify with another loan provider.
Borrowers have to decide whether variable rates will continue to rise and fixed rates will fall to a point where a switch will ensure they are better off after including the cost of changing lenders, typically $650-$1000, and including mortgage discharge fees, government taxes and application costs.
The buffer enables the lender to determine whether the borrower can meet repayments even if rates rise another three percentage points. Those refinancing will also need to own at least 20 per cent of their property or have to pay expensive lenders’ mortgage insurance, which can negate savings from the new loan.
A national decrease of 10 per cent is expected by the end of the year – if the current rate of decline continues – and could reach about 15 per cent before conditions improve, according to its analysis.
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