Seven out of ten refinancers that used a mortgage broker saved money on their mortgage, according to a new report.
Mortgage Choice's latest survey of refinancers has revealed that 45% used a mortgage broker to assist them with said refinancing, and that over half of those people saved more than $150 per month. 61% of those who used a mortgage broker changed loan product and lender, compared to just 26% who did not use a mortgage broker. Mortgage Choice's senior corporate affairs manager, Kristy Sheppard, commented that considering more than one lender brought considerable financial benefit.
"Interestingly, of those who changed loan product and lender, 78% saw their interest rate decrease," said Sheppard. "In comparison, only 56% of those who stayed with the same lender and changed loan product saw their interest rate decrease. Borrowers need to shop around and explore their many options."
Four out of five respondents refinanced their loan with a bank, with 83% of these choosing a major bank. 8% chose a non-bank lender, 6% a credit union, 2% a building society, 2% said ‘other’ and 2% were unsure.
Out of all those surveyed, over two-thirds locked in a reduced interest rate upon refinancing, thereby lowering their minimum repayment level. Of these, 42% reduced it by one percentage point or more. Far and away the most common reason given for refinancing was to switch to a cheaper loan, with nearly a quarter of respondents citing this reason – although 10% refinanced to fund a renovation and 9% to buy an investment property.
The biggest concern for refinancers was the switch itself and any exit fees involved, although 46% of respondents paid no exit fees when refinancing - and some delayed the decision to refinance as a result of such fees.
"It is interesting to hear that after respondents researched their options, 26% delayed the refinance due to charges they would have incurred by doing so earlier," added Sheppard. "They weighed up the cost versus benefit of refinancing, which is what any savvy borrower would do before committing to a large financial decision."