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A survey commissioned by Mortgage Choice found that around one-third of Australian home loan customers are considering refinancing this year.
The survey (conducted by Honeycomb Strategy) revealed that 31 per cent of the 1,000 survey respondents said they are looking to refinance their home loan in 2023. The research has also identified the three groups most likely to seek out refinancing.
Close to one-half of borrowers (44 per cent) aged 35–44 are considering refinancing their home loans, along with 41 per cent of borrowers who have already refinanced a loan over the past two years and 38 per cent of borrowers who have previously seen a mortgage broker.
According to the research, those who refinanced over the last two years were largely driven to secure a better interest rate (58 per cent) or lower their repayments (35 per cent). Notably, 16 per cent of respondents said their current lender would not provide the same interest rate as new customers.
Mortgage Choice chief executive, Anthony Waldron, said they’re seeing growing confidence among borrowers in regard to refinancing, which has “resulted in a strong increase in borrowers exploring refinancing options” especially when borrowers are feeling the pinch from rising interest rates.
“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,” Mr Waldron stated.
“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.”
Although there is an increased interest in refinancing, the research also indicated that there is still a cohort of borrowers who have their reservations.
Of that cohort, the two most common concerns were being worse off after refinancing (59 per cent) or switching home loans would result in a “major hassle” (58 per cent).
Further research indicated that 62 per cent of respondents who refinanced their home loan at least once did so through a broker, with 46 per cent saying they chose to work with a broker to help them find the best deal and 44 per cent said it took the hassle out of contacting other lenders.
“It’s important borrowers are aware that there are costs associated with refinancing,” Mr Waldron added.
“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.”
Following December’s Reserve Bank cash rate decision, property digital settlement platform PEXA confirmed a “mortgage refinance boom” in its Refinance Index released in December 2022.
The index revealed that refinancing activity was up 177.9 points for the week ended 6 December 2022 (the same week the Reserve Bank increased the cash rate to 3.10 per cent), which was up 0.4 per cent from the previous week and was up 8.1 per cent from the same week in 2021.
[RELATED: Refinancing ‘extremely elevated’ as households feel rate pressure]
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