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Less than one in five refinancers is switching products with their existing lender, according to new research from Aussie.
According to new research from Aussie Home Loans – which involves a monthly analysis of loan originations via its broker network – 82 per cent of mortgage-holders who refinanced their loan over the past 12 months switched lenders.
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As such, less than one in five refinancers (18 per cent) altered contract terms with their existing lender.
The major brokerage noted that this trend was also reflected in recent data from the Australian Bureau of Statistics (ABS), which found that 64 per cent of refinancers switched credit providers in May.
Aussie’s monthly research also reported a 10 per cent increase in refinancing activity over the month to 30 June, when compared with the previous corresponding period.
This is in line with data from the ABS, which reported that the total value of refinanced loans peaked at $15.1 billion in May, up 26 per cent from $12 billion in April.
Aussie stated that it expects this trend to continue over the coming months, with its research finding that 70 per cent of mortgage-holders believe it is a good time to refinance their loan, given current market conditions.
Aussie CEO James Symond reflected: “The [record-low] mortgage interest rates and strong competition among lenders are inspiring mortgage-holders to review the state of their home loan to secure a good deal.
“Close to half of the appointments across our national broker footprint are currently about refinancing, including what options and products are available to existing mortgage-holders during these challenging economic conditions.”
Moreover, Aussie’s research found that there remains “widespread confusion” about what refinancing involves, with evidence suggesting that borrowers believe the process involves negotiating a lower rate with their existing lender or splitting between a fixed and variable rate loan.
Mr Symond encouraged borrowers to seek assistance from mortgage brokers, who can help clients manage complexities.
“Two key benefits of using a mortgage broker are finding out what refinancing deals are available in the market, such as cashback offers, and an assessment of eligibility, as this is crucial amid an unusual economic time,” he concluded.
[Related: Mortgage-holders explore refinancing amid COVID-19]
