Refinancing to a lower rate could save thousands of dollars every year – Mozo

Refinancing their variable rate home loan could save Sydneysiders up to $9,440 a year, according to a Mozo analysis.

With CoreLogic’s house values as reference point, data experts at Mozo found that property investors in Sydney could save as much as $786 per month or $9,440 per year by making the switch to a lower variable rate, while Sydney owner-occupiers could pocket savings of up to $703 per month or $8,439 per year by doing the same.

The same Mozo analysis found that refinancing to a lender with a lower rate could save borrowers thousands of dollars every whichever capital they live in.

“By switching from the average variable rate of 6.6% to the lowest rate of 5.54%, investors and homeowners across Australian capital cities could save $474/month, which equates to more than $5,691/year,” said Rachel Wastell (pictured above), Mozo spokesperson.

“By comparing home loan rates on offer, you really can save thousands, as that $400-700 difference in monthly repayments really adds up.”

In Sydney, for instance, investors switching from the average variable rate to the lowest rate could get them nearly $10,000 in savings a year – “a substantial amount of money to put away during a cost-of-living crisis,” Wastell said.

Wastell highlighted the importance of comparing home loan rates to secure the best deal.

“This is money that could be put away in a high interest savings account, or used to help cover the rising cost of living that is eating away at families’ household budgets,” Wastell said. “With NAB predicting a 4.35% cash rate peak, now could be the time to lock in a lower rate before repayments rise again.”

Up to $6,000 in savings a year in Melbourne

Melbourne was not far behind from Sydney when it came to potential savings. Owner-occupiers paying principal and interest in Melbourne could save an extra $498 per month, or $5,981 per year, based on the median house value of $766,9125.

Even in Darwin, where the median house value was much lower at $488,363, owner-occupiers could achieve savings of up to $317 per month or $3,808 per year, Mozo’s calculations showed.

Sydney property investors can get savings too

Sydney property investors paying principal and interest in Sydney could also see savings of up to a whopping $786 per month, or $9,440 per year by refinancing.

On average, refinancing from the average variable rate of 6.96% on an investment loan paying principal and interest, to the lowest rate in the Mozo database of 5.79%, could save savvy investors $530 per month or $6,366 per year across eight of the Australian capital cities.

“For property investors currently feeling the pinch of 12 rate hikes in almost as many months, now could be the time to compare investment loan rates,” Wastell said. “With house prices increasing by 5.3% in the June quarter, it's crucial that investors keep an eye on rates to see if they can get a better deal.”

See the table below for some key savings figures.

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