January 09, 2023
A survey of more than 1,000 Australian home loan customers has found that almost one-third (31%) are considering refinancing their home loan within the next 12 months. The survey was commissioned by Mortgage Choice and conducted by Honeycomb Strategy.
The research revealed the three groups most likely to refinance. Almost half (44%) of borrowers aged between 35 and 44 are considering refinancing, along with 41% of borrowers who have refinanced their loan within the past two years and 38% of borrowers who have used a mortgage broker before.
Mortgage Choice CEO Anthony Waldron said, “We’re seeing growing confidence among Australian borrowers when it comes to refinancing and this has resulted in a strong increase in borrowers exploring refinancing options. This is especially true when borrowers are feeling the pain of rising rates.”
Borrowers who have refinanced in the past two years were primarily driven by the desire to secure a better interest rate (58%) or reduce repayments (35%). A notable 16% said they refinanced because their lender wouldn’t give them the same interest rate as new customers.
Despite Australians’ increasing interest in refinancing, there are plenty of borrowers who still have reservations. The research revealed that the two most common concerns were that they may end up worse off after refinancing (59%) or that switching home loans would be a major hassle (58%).
Mr Waldron said, “If you’re considering refinancing your loan, it pays to speak with a broker. As well as simplifying the refinancing process, they can also easily review a large range of lenders for customers. The research showed us that, on average, borrowers who refinanced with a broker saved $409 on their monthly repayments, compared to $249 for borrowers who went direct to their lender. These amounts can make a big difference over time.”
More and more Australians are turning to brokers to help them secure the best deal in the market. According to the MFAA, mortgage brokers facilitated 71.7% of all new residential home loans in the September 2022 quarter.1
The same is true for refinancing. The Mortgage Choice research found that 62% of respondents who have refinanced their home at least once did so via a broker. They said they chose to work with a broker so they could help them find the best deal (46%) and because it took the hassle out of contacting different lenders (44%).
“It’s important borrowers are aware that there are costs associated with refinancing,” said Mr Waldron. “These can include a discharge fee and fixed-rate break costs from your existing loan, as well as an application fee, mortgage registration fee and sometimes stamp duty or a property valuation fee for your new loan. If your loan amount is more than 80% of your property value, you may also be charged Lender’s Mortgage Insurance (LMI).
“Your broker can work help you compare these costs to the savings you’ll get from switching to a lower rate, so you can decide whether it’s the right move for you.”
1Data released by research group Comparator, a CoreLogic business, and commissioned by the Mortgage & Finance Association of Australia (MFAA). Period is July 2022 – September 2022.
