Let’s talk about refinancing, and what it means for you

A new report by Aussie has shed a light on Australians’ reluctance to refinance and a disconnect between mortgage holders’ understanding of the opportunity offered by refinancing, and their willingness to take action at a time of favourable lending conditions and low interest rates.

Are you a reluctant refinancer? 

• Australian Bureau of Statistics (ABS) data reveals, of the 6 million active mortgages in the market, only 445,000 have been refinanced in the last financial year
• Our research found 6 in 10 Australians with a home loan say they aren’t confident that they have a good deal, while most Australian mortgage holders (53%) believe now is a good time to refinance
• Yet over half (60%) have not reviewed their home loan in the last 12 months, while only 1 in 5 (20%) have acted and refinanced their mortgage in that time
  

Of the 1,003 mortgage holders surveyed, 60% of borrowers have not reviewed their home loan in the last year and only 20% have taken action by refinancing their home loan in that time.

David Hyman, CEO Lendi Group (parent company of Aussie and Lendi), believes Aussies could now be at a huge disadvantage with 54% not having refinanced their current home loan. “It's shocking,” Hyman said.

Why are Australian homeowners slow to cash in on refinancing?

Some of the reasons why Australians are not refinancing include believing it’s too hard or being unsure where to begin the process (22%), not believing they can get a better deal (18%), or concern that they will end up worse off or paying more money (24%).

A further 28% said they are unaware of their current home loan interest rate, despite rates being at one of the lowest points in many years.

CEO of Lendi Group, David Hyman says, “The gap here is staggering. With three quarters of Australia in lockdown, we understand that refinancing may not be top of mind right now, but by not setting aside a small amount of time to look at their home loan, Australian mortgage holders could be missing out on thousands in savings, which could be really helpful for many families.”

What is the savings upside to refinancing?

While most (62%) respondents said they understand the importance of refinancing a home loan on a regular basis, only 1 in 5 (20%) mortgage holders in Australia have acted and refinanced their mortgage in the last 12 months.

As a result, Australians are missing out on the full potential of refinancing right now, internal data from Lendi Group (parent company of Aussie and Lendi brands) shows that refinancers could save around $2,000[2] by dropping less than 1% in their interest rate.

CEO of Lendi Group, David Hyman says, “There are approximately 6 million outstanding mortgages in Australia, and less than 450,000 of those have been refinanced in the last financial year[3], despite unprecedented low interest rates.”

“It’s important to take the first step and speak to an expert who can advise. A mortgage broker can help you understand how your current home loan compares the market, and in some instances help you negotiate a better rate with your existing lender.”

How can homeowners take action?

“With three quarters of Australia in lockdown, we understand that refinancing may not be top of mind right now, but by not setting aside a small amount of time to look at their home loan, Australian mortgage holders could be missing out on thousands in savings, which could be really helpful for many families.”

“It’s important that Australians understand that reviewing a home loan does not have to mean that you will end up worse off.

If you don’t understand the process, you can speak to a mortgage broker with no obligations, and they can help you understand your financial situation and what opportunities are available through refinancing,” Hyman said.

Where to from here?

If you’re ready to take the refinancing plunge, here are some considerations you should take a look at first:     

• Refinance cashback incentives
• Switching between fixed and variable    
• Living expenditure
• Benefits of an offset or redraw facility

Get in touch with one of your local Aussie Brokers who have access to a range of lenders and can provide home loan help for those looking to take advantage of refinancing.

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