I’ve had quite a few clients contact me lately asking whether they should fix their rate or refinance because of the recent news around inflation, oil prices, and possible interest rate movements.
I’ve just recorded the latest “Should I Fix” analysis video that you can access here;
Navigating Interest Rate Decisions: Should You Fix? 📈
…but the cheapest fixed rates available might not be with your current lender.
For this reason, I thought I’d share a quick guide that helps you estimate whether refinancing to a fixed would actually save you money compared to what your current lender might be offering.
Below is a simple example comparing several common lenders against one of the lower fixed rates currently available in the market.
Assumptions used:
- 2-year fixed rate comparison
- Example lower rate: 5.69%
- Estimated refinance costs: $900
The table shows the approximate net savings over 2 years after refinance costs.
| Current Lender | Rate | $250k Loan | $500k Loan | $750k Loan | $1m Loan |
| Cheapest 2 Year Rate | 5.69% | Baseline | Baseline | Baseline | Baseline |
| ANZ | 5.79% | -$400 | $100 | $600 | $1,100 |
| NAB | 5.79% | -$400 | $100 | $600 | $1,100 |
| HSBC | 5.79% | -$400 | $100 | $600 | $1,100 |
| St.George | 5.89% | -$300 | $600 | $1,500 | $2,400 |
| Westpac | 5.89% | -$300 | $600 | $1,500 | $2,400 |
| Macquarie | 5.94% | -$150 | $850 | $1,850 | $3,000 |
| CommBank | 6.04% | $850 | $2,600 | $4,350 | $6,100 |
(All figures are approximate and assume a $900 refinance cost.)
What this shows
For smaller loans, refinancing often doesn’t produce meaningful savings once costs are included.
For Example;
- If you have a $250k loan with ANZ, refinancing to a 5.69% rate would actually be slightly worse off due to estimated refinance costs
- If you have a $250k loan with CBA, the very high rates being offered by CBA might mean you save around $850 over two years
But on larger loans the numbers become more meaningful. For example, a $1m loan with CBA could save around $6k over two years. Loans higher than this are even more compelling.
What this means for you if you want to fix for 2 years
If your loan is:
- Under $400k – refinancing may not be worth it unless your rate is quite high.
- $500k–$800k – it depends on your current lender
- $800k+ – it’s highly likely a refinance could provide compelling savings
If you’d like us to check your specific situation, just hit reply and we’ll provide you with a quick comparison.
Keep in mind – qualifying criteria still applies for a refinance.