Refinancing isn’t just about if you should do it – it’s about when. Pick the right time and you could save thousands, unlock flexibility or simplify debts. If you move too early, fees or clawbacks can erode your savings. So how do you know when the timing is right?
Therefore, a refinance when interest rates are low or falling can be a smart financial decision, but it may not always be the right one. We help with the answer to “Is it a good time to refinance when interest rates are low”? Some homeowners fail to act when interest rates are dropping, possibly missing out an opportunity to save thousands over the life of their mortgage. This can be a good decision, although there are many factors you need to consider before doing so, because the true answer to “is it a good time to refinance when interest rates are low”, is “maybe” you should, but “maybe” you should not. Knowing when to act, what to look out for, and how to structure your mortgage could mean the difference between thousands saved or thousands lost unnecessarily.
Let’s break it down.
Why Interest Rates Matter
Falling interest rates are the number one trigger for most homeowners who ask “Should I refinance now?”. When rates drop below what your currently paying, refinancing can cut monthly repayments.
But low rates alone don’t guarantee savings. Timing around fixed terms, break fees, and your circumstances matters just as much.
For more on the wider benefits of refinance see our Refinance Hub.
Interest rates could have a huge impact on the cost of your mortgage. When rates fall below the current rate you are paying on your fixed or floating rate, refinancing could offer lower repayments, increased savings, or the chance to access equity for other goals.
Timing Checklist
Here are the top signals it might be the right time to refinance:
- Your fixed term is expiring within the next 60-90 days.
- Your current rate is 1% or more above what’s available.
- Your property’s value as risen, lowering your loan-to-value-ratio (LVR)
- You have upcoming life changes – renovation, new income, debt consolidation or a growing family.
Learn more about how refinancing works step-by-step in our Mortgage Refinancing Guide.
Break-Even First, Then Decide
Even if rates are lower, you’ll often face break costs when refinancing early. The question is: Will your savings outweigh the fees?
Example:
- Break fee = $2,000
- Monthly savings = $250
- Break-even point = 8 months
If you keep your mortgage longer than that, refinancing usually makes sense. If not, you better off waiting.
Use our refinance calculator to estimate your own break-even point
Windows That Matter
Timing is not just about the interest rates – lender rules matter too:
- Fixed term expiry: how close or how far you are to the fixed term expiry influences your break fee.
- Cashback clawbacks: many lenders may require you to stay 2-3 years after receiving a cashback. If you leave too early you may need to repay it.
Market Scenarios and What They Mean
- Rates are falling: Refinance if your break-even period is short and you’ll stay put. Consider splitting your loan for flexibility
- Rates are flat: Only worth it if you’re significantly above current rates.
- Rates are rising: Refinancing sooner can help lock in a lower rate before rate increases hit.
Not sure which is right for you? Compare refinance strategies here.
When Not to Refinance Yet
It’s often better to wait if:
- You only have a few months from your fixed term expiring.
- Break fees are so high that savings don’t stack up.
- You intend selling your property soon.
- Your financial situation is uncertain (example job change)
In these cases, refinancing too early could cost more than it saves.
Timing FAQ – Frequently Asked Questions
When it comes to refinancing, timing can feel tricky. Here are some of the most common questions we hear from clients — and clear answers to guide your decision.
Q: Should I always refinance when rates drop?
A: No. Lower rates are tempting, but the real test is whether the savings outweigh fees. Always do a break-even check first.
Q: How big should the drop in rates be?
A: There’s no magic number. If the difference pays off your break fees within about 12 months, it’s usually worthwhile.
Q: What if rates keep dropping after I refinance?
A: That’s always a possibility. The key is to focus on what works for your situation now. You can protect yourself by splitting your loan — keeping part fixed and part floating — so you get some benefit if rates fall further while locking in certainty on the rest.
What to Read Next
Mortgage Refinancing Guide – for the full refinancing process explained in depth. Mortgage Refinance Strategies – to compare refixing, debt consolidation and equity release. Refinance Hub – for quick benefits and eligibility.
Final Word
So, is now a good time to refinance?
It could be – if your fixed term is ending, rates are lower, and your break-even point makes sense. If however, your fees are high, clawbacks apply, or you’re planning a move, waiting may save you more.
The key is matching the market with your personal timing.
Ready to check your numbers? Start your refinance application online, it only takes a few minutes.
★ We Are Trusted
Angela is an accredited Financial Adviser, licensed under FSP742251 and has been in the Financial Industry since 2006. Our 5-star Google reviews reflect the excellent customer experience we promise — making your home loan journey positive, stress-free, and rewarding. At Platinum Mortgages, our clients are the reason we exist — so you can be confident every step is guided by genuine care and expertise.