Mortgage refinancing in Australia has hit record levels according to new analysis of consumer data.
According to analysis by finder.com.au of lending figures compiled by the Australian Bureau of Statistics, nearly 22,000 Australians refinanced their home loan during December 2015.
Finder’s analysis shows that in the 12 months to December 2015, the number of home loans refinanced in Australia increased by 20%.
Finder consumer advocate Bessie Hassan said there is all likelihood the refinancing trend will continue as borrowers look to beat any possible rate rise by lenders.
“The total value of refinanced home loans is forecasted to reach $100 billion this year, an increase from the record $77 billion in 2015,” Hassan said.
“With signs pointing to a rate rise in the near future, now is a great time for homeowners to consider refinancing. As it stands, the cash rate is at a historical low and providers are offering among the lowest rates ever seen – borrowers can potentially save thousands of dollars per year by making the switch to a better deal,” she said.
Finder’s analysis showed that based on a $354,614 average 30-year home loan refinanced from the current 5.11% standard variable rate (SVR) to the average 3-year fixed rate at 4.59%, which returns to the current SVR after three years, the 21,896 Australians who refinanced their home loans over December collectively saved about $148 million in interest payments by fixing their mortgage.
“That’s an impressive $6,771 saving per homeowner over the fixed period of the loan,” Hassan said.
Hassan said the willingness to refinance showed that borrowers are not being negligent with their financial security.
“This indicates that low interest rates and money savings are top of mind for borrowers – which is the way it should be,” she said.