Borrowers queue up to refinance loans

By By Karina Barrymore, From: Herald Sun, 11 November 2010

HOME loan borrowers are flocking to brokers and lenders to ask about the cost of switching loans, as more lenders start to pump up their interest rates.

Finding a cheaper loan is the single biggest motivation for refinancing, according to a survey, but it still only accounts for one in four switches.

Other reasons include debt consolidation, funding a renovation and buying an investment property, the survey found.

Lenders, finance brokers and comparison websites have reported increases of more than 200 per cent in the number of inquiries from people considering their loan options since the Reserve Bank of Australia increased the official cash rate last week by 0.25 per cent and lenders started to push up rates to their customers.

Mortgage and Finance Association of Australia chief executive Phil Naylor said yesterday that its brokers had been "inundated" with inquiries.

"There is no doubt consumer sentiment is building as borrowers look for ways to offset rising interest rates and hop around for a better home loan deal, " Mr Naylor said.

Switchers invested a large amount of time researching their move with 76 per cent taking up to six months and 21 per cent spending up to 12 months.

The biggest concerns were the cost, making the wrong decision, the time it would take to move and "confusion" about the process, the survey found.