• LoanCaddie

Can I still refinance? Interest rates are falling, but so is the value of my property.

Fixed interest rates have fallen to 3.49% p.a. (3.87% p.a. comparison rate*) and lenders are offering cash back incentives to refinance. You may be thinking that now is an excellent time to refinance. However, property values are also declining, and current property prices may impact your ability to refinance to a lower interest rate.

If you are unsure about the market valuation of your property and your ability to refinance to a better rate, here are some tips for you to consider.

  • Lender paid valuations – Several banks are willing to pay for the cost of the valuation. This means that you don’t have to pay for the dead cost of the valuation if the value is lower than anticipated and as a result, refinancing is no longer attractive. This is important since the cost of a valuation can be expensive ($300-$600 per property).

  • Valuation validity period – Lenders require that the valuation is recently carried out (usually within the last three months). If you have recently obtained a valuation, this means you have up to 3 months since the valuation date to wait for better interest rate offers. Over the past week, we have seen significant reductions in 3-year fixed interest rates.

Chart: Annual change in dwelling values
Source: CoreLogic, April 2019

If you like to understand which lenders offer to pay for valuations, let us know or visit our Interest Rate Finder.