Surge in home loan refinancing
Almost 22,000 Australians refinanced their mortgages in December 2015 thanks to low interest rates, according to finder.com.au analysis.
The analysis of the latest Australian Bureau of Statistics, housing finance data found Australians are becoming savvier with saving money on their home loans.
finder.com.au consumer advocate, Bessie Hassan, said the total value of refinanced home loans is forecast to reach $100 billion this year, an increase from the record $77 billion in 2015.
"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," Hassan said.
"For example, the 21,896 Australians who refinanced their home loans last December collectively would have saved about $148 million in interest by fixing their mortgage for three years at a cheaper rate."
Hassan said this was based on a $354,614 average 30-year home loan refinanced from the current 5.11 per cent standard variable rate (SVR) to the average three-year fixed rate at 4.59 per cent, assuming a return to the current SVR after three years.
The analysis said the number of home loans being financed surged by 20 per cent in the past 12 months compared to December 2014.
"As with any major financial decision, shop around, because rates and fees can vary significantly between lenders," Hassan said.
"Also, borrowers need to carefully consider whether refinancing is the best financial decision for their personal situation — evaluate discharge fees charged by your current lender as well as upfront fees by the new lender."
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