Mortgagees continue to switch lenders en masse

New figures released by the Australian Bureau of Statistics (ABS) show that homeowners with mortgages still seem to be making the most of relatively competitive interest rates by switching their loans in considerable numbers.

Released as part of the ABS’s latest Lending Indicators release, the figures reveal that $14.3 billion in home loans were refinanced with a new lender during the month of January – $9.2 billion from homeowners and $5.1 billion from investors.

While that total figure of $14 billion was actually down month-over-month, the ABS noted that the amount of refinancing undertaken was still 18.7% higher than in the same period in 2021.

In fact, the January total is the ninth-highest month on record for the ABS since it began tracking rollover data in 2004.

January 2022 external refinancing values ​​(seasonally adjusted). Source: abs

Is changing credit worth it?

Given that $14 billion in home loans were refinanced in January and a record $181 billion was transferred over all of 2021, some borrowers may be wondering, “Why didn’t I refinanced my own home loan?” and “Is it worth changing?”.

Deciding whether or not to refinance is unlikely to be a simple yes or no decision, as there are a number of factors that can determine whether it is worth it, or even possible.

For example, some mortgage holders will not be able to refinance with another lender if their loan-to-value ratio is above 80%. It also might not make financial sense for those who are currently locked into a fixed rate with substantial breakage fees, or for anyone who already enjoys a competitive rate.

If you’re able to refinance at a lower rate, it could be worth it considering the potential savings on offer – both in terms of money saved on monthly repayments and in total interest over the life of the loan.

Here is an example using the current average homeowner loan amount ($618,729) in Australia being repaid over a 20-year period with principal and interest repayments.

Monthly repayments Total interest
2.00% $3,130 $132,482
2.50% $3,279 $168,150
3.00% $3,431 $204,820
3.50% $3,588 $242,482
4.00% $3,749 $281,121
4.50% $3,914 $320,723

This is just a typical range of home loan rates available today, and it’s safe to say that over a 20-year period, any mortgage holder’s rate will generally fluctuate quite a bit. The takeaway, however, remains the same: a lower interest rate could help reduce the cost of the loan significantly over time.

RELATED: Many lenders offer $3,000 cash back to refinance your home loan

Want to know how much you could potentially save by switching loans? Make your life easier by taking our change and savings calculator for a spin, or familiarize yourself with a range of refinance offers by heading to Mozo’s dedicated refinance home loan comparison table.

* ATTENTION: This comparison rate only applies to the example or examples given. Different amounts and durations will result in different comparison rates. Costs such as withdrawal charges or prepayment charges, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate shown is for a secured loan with monthly principal and interest repayments of $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges, and therefore the total cost of the loan, may vary depending on your loan amount, loan term and your credit history. Actual repayments will depend on your personal circumstances and changes in interest rates.

^ See Mozo Experts Choice Home Loan Awards information

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