More than 1 million Australians refinanced their home loan over the past 12 months, saving an estimated $1,524 per year on average, a consumer report into refinancing sentiment and behaviours showed.
The PEXA Refinancer Sentiment Research Report revealed that Australians who switched mortgage lenders when refinancing saved an estimated $1,908 per annum on average, compared to the average $384 annual savings of homeowners who refinanced with their existing lender.
Australia has experienced record refinancing activity, with PEXA’s refinancing index reaching 201.1 in the week ending Sept. 4. And there were no signs of this trend easing, with PEXA’s latest report revealing that nearly 2.3 million Australians were considering refinancing in the next two years.
Of the nearly 8 million Australian mortgage holders, 31.2% have been found to be in the “refinancing mindset.” And of those who recently refinanced, 81% were expected to refinance again within the next two years.
Although the report suggested that switching lenders will bring considerably more savings, 55% of recent refinancers stayed with their existing lender when refinancing.
Key findings also showed that homeowners refinanced their home loan on average an estimated 5.6 years after purchasing the property. The top reasons for refinancing were wanting a more competitive interest rate, needing to save money, and broker recommendations. The top three barriers to refinancing, meanwhile, were interest rate instability, the onerous application process, and current lender providing a competitive rate.
“More and more Australian consumers are hunting out the most competitive interest rates, leading to record high levels of refinancing,” said Mike Gill, PEXA Insights head of research. “This momentum is set to continue, as mortgage holders are investing on average six weeks into researching options that best suit their circumstances. Our consumer research confirms there is a level of uncertainty felt by mortgage holders, with an estimated 71% feeling anxious about the prospect of rising interest rates, 49% worried about their job/financial security, and 73% are regularly reviewing their interest rate against market trends.”
The estimated average value of properties being refinanced was $732,000, and in most cases, it was the refinancer’s primary residence. Refinancers, on average, had approximately $491,000 left on their home loan, with an estimated average of 34% of the household income being spent on mortgage repayments, the PEXA report showed.
