One in three borrowers are likely to refinance their home loans this year, a new survey shows.
The survey*, commissioned by Mortgage Choice, found that almost one-third (31%) of respondents are considering refinancing their home loan within the next 12 months.
Almost half (44%) of borrowers aged between 35 and 44 are considering refinancing, along with 41% of borrowers who have refinanced their loan within the past two years and 38% of borrowers who have used a mortgage broker before.
Mortgage Choice CEO Anthony Waldron said that there is a growing confidence among Australian borrowers when it comes to refinancing.
“This has resulted in a strong increase in borrowers exploring their options”, Waldron said, adding “this is especially true when borrowers are feeling the pain of rising rates.”
Borrowers who have refinanced in the past two years were primarily driven by the desire to secure a better interest rate (58%) or reduce repayments (35%). A notable 16% said they refinanced because their lender wouldn’t give them the same interest rate as new customers.
Despite Australians’ increasing interest in refinancing, there are plenty of borrowers who still have reservations.
The research revealed that the two most common concerns were that they may end up worse off after refinancing (59%) or that switching home loans would be a major hassle (58%).
To this, Waldron suggests that if you are 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.
“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”, he said.
The research also found that 62% of respondents who have refinanced their home at least once did so via a broker. They said they chose to work with a broker to find the best deal (46%) and because it took the hassle out of contacting different lenders (44%).
“It’s important borrowers are aware that there are costs associated with refinancing,” Waldron warned.
“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.
“If your loan amount is more than 80% of your property value, you may also be charged Lender’s Mortgage Insurance (LMI)”, he added.
Whether you use a broker or not, it is important to compare the costs to the savings you’ll make by switching to a lower rate, before deciding whether it’s the right move for you.
*The survey of more than 1,000 Australian home loan customers was commissioned by Mortgage Choice and conducted by Honeycomb Strategy.
