Interest Rates Just Dropped — But Should You Refinance?

The interest rates have just dropped, but is refinancing right for you and your family?

With the RBA’s recent interest rate cut making headlines, many Inner West families are wondering: Is now the right time to refinance? It’s a tempting thought – especially when budgets are tight and the cost of living is still biting. But before you jump on a shiny new rate, it’s important to pause and look beyond the number. Because sometimes, a lower interest rate doesn’t equal bigger savings.

Local finance broker and mortgage expert, Rebecca Morgan of My Mortgage Concierge, recently ran the numbers for one of her clients, Lisa – a mum with an investment loan of $430,000 and $100,000 sitting in her offset account.

Lisa’s current interest rate is 6.15%, but she was eyeing lenders offering 5.89% and 5.99%.

Here’s how it played out when all costs were considered:

Lender	Rate	Interest Cost (after offset)	Annual Fees	Total Cost
Current Lender	6.15%	$20,340	$248	$20,588
Option 1	5.89%	$19,437	$299	$19,736
Option 2	5.99%	$19,767	$120	$19,887

On paper? Option 1 could save Lisa $852 in the first year.

But in reality? Once you add in switching costs (like discharge fees and government registration), Lisa would actually be $191 out of pocket in Year 1 – and that’s before counting the time and energy of the switch.

Couple reviewing finances. Image courtesy of Mikhail Nilov, Pexels.com

🚨 The Hidden Trap: Extending your loan term

There’s another common pitfall families should watch for – refinancing over a new 30-year term, even if you’ve already paid down several years of your loan.

Let’s say you originally borrowed $650,000 over 30 years at 6.25%. After 5 years, your balance is $615,000. If you refinance that over another 30 years at 5.89%, you’d pay $696,000 in interest.

But if you stick to the remaining 25 years? That drops to $560,000** — a potential saving of $136,000.

Even small changes in your repayments can have a big impact. For example, bumping up your repayments by just $200 a fortnight could shave off 5 years and $125,000 from your total interest.

Family discussing finance options. Image courtesy of Alena Darmel, Pexels.com

✅ What This Means for You

Feeling overwhelmed by the math? You’re not alone — and you don’t have to figure it out yourself.

A good mortgage broker can run all the comparisons, crunch the real numbers, and make sure any advice is actually in your best interest.

Even better? This kind of help is usually free for borrowers.

So yes – refinancing might still be a great move. But as Inner West families know, the smartest choices are rarely the fastest ones. Ask the right questions, weigh up the real numbers, and don’t be afraid to seek expert advice before making a move.

Curious to explore your refinancing options? Speak to Rebecca Morgan at My Mortgage Concierge or click here to book an appointment.

🌏 mymortgageconcierge.com.au

📍 Homebush West, NSW

☎️ 02 8014 4443

Disclaimer: The information provided in this article is general in nature and does not take into account your personal objectives, financial situation, or needs. Always seek personalised advice before making financial decisions.