A survey commissioned by Mortgage Choice has found that almost one-third of home loan customers are considering refinancing their home loan within the next 12 months, but reservations remain among many borrowers.
The survey of more than 1,000 Australian home loan customers revealed that 31 per cent are considering refinancing their home loan in 2023.
The research – commissioned by Mortgage Choice and conducted by Honeycomb Strategy – also found that there are three groups that are most likely to refinance.
Almost half (44 per cent) of borrowers aged between 35 and 44 are considering refinancing, along with 41 per cent of borrowers who have refinanced their loan within the past two years and 38 per cent of borrowers who have used a mortgage broker before.
Borrowers who have refinanced in the past two years were primarily driven by the desire to secure a better interest rate (58 per cent) or reduce repayments (35 per cent), according to the research.
Notably, almost a fifth (16 per cent) said they refinanced because their lender would not give them the same interest rate as new customers.
However, despite this spike in interest to refinance home loans, the research revealed that there is a significant number of borrowers who still have reservations.
Indeed, 59 per cent expressed concerns that they could end up “worse off” after refinancing, while 58 per cent said switching home loans would be a “major hassle”.
Commenting on the research, Mortgage Choice CEO Anthony Waldron said the major brokerage is seeing growing confidence among borrowers in relation to refinancing, which has resulted in more borrowers exploring refinancing options, particularly in an environment where interest rates are rising.
However, for those considering refinancing their loans, “it pays to speak with a broker”, he suggested.
“As well as simplifying the refinancing process, they can also easily review a large range of lenders for customers,” Mr Waldron said.
“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.”
Research by Mortgage Choice revealed that 62 per cent of respondents who have refinanced their home at least once did so via a broker.
These borrowers said they chose to work with a broker so they could help them find the best deal (46 per cent) and because it took the hassle out of contacting different lenders (44 per cent).
“It’s important borrowers are aware that there are costs associated with refinancing,” Mr Waldron said.
“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 per cent of your property value, you may also be charged Lender’s Mortgage Insurance (LMI).”
Recent research by digital property settlement platform PEXA revealed a refinancing boom as the Reserve Bank of Australia (RBA) lifted the official cash rate for the eighth consecutive time in December 2022 to a 10-year high of 3.1 per cent, up from a record low of 0.1 per cent in April 2022.
Similarly, research by home loan marketplace Joust revealed last year that over-extended borrowers with larger home loans rushed to refinance in October 2022 amid the rapid rate rises.
If you’re looking to refinance for a better rate or looking for the right rate for your clients at zero cost, contact Finni mortgages experts and let us do the hard work for you.
Visit our website here or call 1300 002 023 to learn more on how we can help you.