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Owner-occupiers are increasingly on the hunt for a better deal, with a growing number of mortgage holders refinancing their home loan with another lender, the latest ABS data has revealed.
The Australian Bureau of Statistics (ABS) has released its latest Lending Indicators data, reporting a rise in the number and value of external refinances among owner-occupiers in January.
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The ABS reported a 5.9 per cent (seasonally adjusted terms) increase in the number of owner-occupiers who switched home loan, from 14,534 to 15,401.
In value terms, external refinancing among owner-occupiers increased by 4.7 per cent, from $6.3 billion to $6.9 billion.
This follows research from the Reserve Bank of Australia (RBA), which found that aggressive competition for new borrowers has led to sharp increase in the average discount on standard variable rates offered by major banks, from approximately 100 bps in 2015 to an average of approximately 175 bps in 2019.
Competition for new borrowers is set to intensify further, with lenders slashing their mortgage rates in response to the latest cut to the cash rate from the Reserve Bank of Australia (RBA).
Aussie Home Loans CEO James Symond has called on borrowers to reap the benefits of a record-low interest rate environment.
“I expect many fixed and variable mortgage rates will fall below 3 per cent over the next month,” he said.
“Borrowers should be exploring the market for competitive rates and speaking with a reputable mortgage broker.
“A decision to see a mortgage broker could save borrowers thousands of dollars and years off their repayments over the life of the mortgage.”
Mr Symond added that he is expecting refinance rates to spike beyond 30 per cent of new flows – as currently experienced by Aussie’s broker network.
“Now is a great time to refinance and exploit the strong competition amongst lenders, but borrowers need to get sound, well-researched advice from a credible broker or lender before taking this step,” he concluded.
[Related: Cuts to fuel refinancing rush]
