New research from PEXA has revealed more than one million Australians refinanced their home loan over the past 12 months, saving an estimated $1,524 per year on average.

The report also shows mortgage holders who refinance their mortgage to a new lender could save an estimated $1,908 a year on average compared to an estimated saving of $384 per year for homeowners that refinanced with their existing lender.

The PEXA Refinancer Sentiment Research Report found the nation has experienced record refinancing activity, with no signs of this trend slowing. Almost 2.3 million Australians were considering refinancing in the next two years.

PEXA found 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 were interest rate instability, the onerous application process, and the current lender providing a competitive rate.

Birdie Wealth general manager and broker Nathan Smith said he had seen an increase this year in clients wanting to refinance their home loans.

“Clients are certainly more conscious of their current rates at the moment. The more the media mentions rate movements, the more calls we get from clients,” Smith said. “A significant portion of our day is spent reassuring clients of their financial position and discussing alternate options available.”

Smith said he expects this trend to continue.

“While rates continue to move, we will see this trend ongoing,” he said. “Banks are certainly competitive at the moment and the offerings to refinance are strong.”

Smith said with fewer property transactions, lenders had turned their attention to their refinance offerings and client retention.

“We have noticed many lenders improve turnaround times and have cleaner onboarding processes. This makes the option to refinance much more attractive,” he said.
PEXA Insights head of research Mike Gill said more and more Australian consumers were hunting out the most competitive interest rates.

“This leads to record high levels of refinancing. This momentum is set to continue as mortgage holders are investing on average six weeks into researching options that best suit their circumstances,” Gill said.

“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% regularly reviewing their interest rate against market trends.”

Gill said the estimated average value of properties being refinanced was $732,000 and in most cases, it was the refinancer’s primary residence.

“On average, refinancers had approximately $491,000 remaining on their home loan, with an estimated average of 34% of the household income being spent on mortgage repayments,” he said.

“There are currently nearly eight million Australian mortgage holders and analysis from the report suggests 31.2% of mortgage holders are in the ‘refinancing mindset’. Of note, 81% of those who recently refinanced expected to refinance again within the next two years.”

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