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Refinancers saving thousands on mortgage repayments

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Reporter 3 minute read

Borrowers who have opted to refinance are saving an average of 66 basis points on their home loan interest rate, according to new research from Aussie Home Loans.

New research from Aussie Home Loans, based off data collected from 11,300 refinanced home loans over the past two years, has revealed that home owners are saving approximately $134 per month or $1,614 per year when refinancing with an average loan size of $346,310. 

The Aussie research found that, on a state-by-state basis, borrowers refinancing in the Northern Territory reported the sharpest drop in their interest rates (1.29 per cent or $243 per month), followed by the ACT (85bps or $182 per month), Western Australia (82bps or $160 per month), Queensland (78bps or $144 per month), South Australia (64bps or $105 per month), Victoria (63bps or $130 per month), Tasmania (63bps or $88 per month) and NSW (61bps or $136 per month).

Reflecting on the data, Aussie CEO James Symond encouraged borrowers to review their home loan rate, noting that lenders have been repricing their home loans despite monetary policy inertia from the Reserve Bank of Australia (RBA).

“The national average interest rate fall from 4.67 per cent to 4.01 per cent shows that even in a low interest rate environment, there are still deals to be done and savings to be made when you get expert help,” he said.

“Even though the RBA hasn’t moved rates for over two years, lenders have been making their own interest rate adjustments, with many increasing rates for existing customers while saving their best deals for new borrowers.

“In this market, it certainly pays to keep an eye on your home loan rate and review it with your broker regularly or at least every year.”

The Aussie research also found:

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  • Singles are making bigger savings than joint borrowers, with single females saving 71bps and single males saving 72bps, compared to a 64bps saving for joint borrowers on average.
  • Customers who have had their home loan for six or more years recoup the biggest interest rate saving, down 1.89 per cent on average, followed by loans held for four to five years at 99bps.
  • Owner-occupiers are recouping larger savings than investors, reducing their mortgage rates by 81bps compared to 62bps on average for investors.

“In general, there is a lot more focus by borrowers and the media on interest rates, the property market and tightened home lending,” Mr Symond added.

“Our data shows that despite this and even in markets where capital growth has been challenged like NT and WA, savings may still be found by securing a lower interest rate, putting valuable dollars back into customers’ pockets instead of the banks’.

“Complacency is the killer, so my top tip is to keep on top of your home loan and review it each year, just like a pink slip for your property.

He concluded: “An annual home loan health check with your broker doesn’t cost you anything and could save you thousands.”

New lender added to Aussie’s panel

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Aussie Home Loans has also announced that West Australian-based lender, Keystart, has joined the brokerage’s panel of lenders.

Mr Symond welcomed Keystart to the panel, stating that the government-owned lender would provide brokers with access to alternative mortgage products with lower deposit requirements.

“Keystart is an exciting addition to our panel as it provides greater choice and access to affordable home loans for West Australians seeking a genuine alternative lender outside the major and mid-tier banks,” Mr Symond said.

“Keystart has a unique offering, requiring a deposit from as low as 2 per cent from customers, depending on location. Our WA team of 80 mortgage brokers, including 18 retail stores, are excited to be able to offer Keystart to first home buyers to help them purchase a home sooner.

“Keystart provides a range of unique features for first home buyers and it will be integral in our WA offering in the future.”

Mr Symond claimed that access to Keystart’s offering is particularly important amid the continued application of rigorous lending standards.  

“In the current tighter lending environment, it’s important that we give our brokers and customers access to such an accessible product,” he concluded.

Keystart CEO Paul Graham added: “We are excited to be partnering with Aussie to help more Western Australians into home ownership.

“The broker channel remains an important contributor to Keystart’s business, and we welcome the additional choice Aussie provides Western Australians.”

Following Keystart’s addition, the number of lenders on Aussie’s panel has now increased to 24.

[Related: Neo-lender banks on brokers with new partnership]

Refinancers saving thousands on mortgage repayments
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