A shift away from fixed rate mortgages is coming sooner than many were predicting earlier this year, with data from home loans marketplace Joust showing a jump in variable and split rate loan enquiries, even before this week’s rate hike.

This week the RBA lifted the target cash rate by 50 basis points, hitting 1.85% – the highest it has been since 2009. It’s also the fourth hike this year, as the RBA attempts to quell inflation, and banks have been only too ready to pass these interest rate rises on to mortgage holders.

Rising interest rates have several implications for the property market, not least of which being falling property prices. But for the many Aussies who took out home loans in recent years with record low, fixed interest rates, the refinancing revolution has already begun.

The rush to refinance

For the month of June 2022, Joust saw a 218% increase in customers using its Instant Match platform, compared with the same month in 2021. In July these figures remained strong, with a 217% increase on the prior year. Instant Match works by instantly matching borrowers with the top three competitive home loans from Joust’s trusted partner lenders.

Rising interest rates have also had a clear impact on the types of loans that borrowers are looking to, with variable rate loans and split loans much more popular on Joust’s Live Auction platform.

Joust saw a 4.35% increase in customer demand for variable rate loans in June, up to 35.34% from 30.99% for the same month in 2021. Meanwhile, demand for split home loans climbed from 7.67% last year to 13.64% this June. In July too, with 40.83% of loans accessed through Instant Match being variable rate loans, and this trend looks set to continue upwards.

Joust CEO Carl Hammerschmidt said: “It only makes sense that as people are coming to the end of their fixed rate loans, that variable rates are becoming more attractive.

“This trend will only continue throughout the remainder of the year and into 2023, further rate rises making both variable and split loans a significantly more palatable option for borrowers.”

Victorians first off the mark

Victorians are leading the way when it comes to demand for refinancing. This data comes from Joust’s Live Auction platform which sees lenders and brokers bid for customers. In June, 34% of loans obtained via Live Auction were from Victoria, up from 24% in 2021.

Victoria was followed by NSW when it came to loans bidded for, still accounting for over 34% of loans on the platform. Queenslanders were third most likely to refinance (18%), with Western Australia (14%) and South Australia (5%) making up the top five.

This article was developed in collaboration with Joust, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.