Refinancing hurts hip pocket

Some fringe brokers may be taking advantage of Australian homeowners who are feeling the pinch of rate hikes, a new report has revealed, as some families face refinancing fees as high as $24,000.

The research, conducted by the Australian Securities and InvestmentsCommission (ASIC), investigated the risks for homeowners of inappropriate refinancing in response to mortgage stress and found that the loans at best provided only short-term solutions.

ASIC acting executive director of consumer protection Delia Rickard said the report examined the experiences of borrowers that refinanced at great expense without resolving their underlying financial problems.

“These borrowers were intent on saving their family home, which placed them in a vulnerable position where they were prepared to accept almost any solution,” she said.

Of the cases studied for the report, plenty of borrowers refinanced into interest only loans for one or two years with high upfront costs.

Rickard said borrowers needed to seriously examine their financial position and determine whether their problem is a temporary difficulty in meeting repayments or a more fundamental inability to service the loan.