Finder's Refinancing Report combines lending data with a survey of over 1,000 Australians who have recently refinanced their mortgage, or are planning to. This report seeks to better understand the behaviours and attitudes of the growing market of refinancers.
The average refinancer had a variable rate of 5.01% before refinancing. After refinancing this dropped to 4.78%.
76% of refinancers say that the cost of living crisis has pushed them to look outside of the Big Four banks.
The average loan size for a millennial planning to refinance is $412,581 – almost double baby boomers ($240,422).
1 in 5 (18%) respondents are not confident and 63% are only slightly confident in their knowledge of refinancing.
1 in 4 (24%) women are not confident in their knowledge of refinancing compared to only 1 in 10 (10%) men.
Record-breaking refinance figures
In late 2020 the Reserve Bank of Australia (RBA) lowered the the cash rate target to just 0.1%. This move spurred many Aussies to refinance to incredibly low interest rates. When the RBA began rapidly raising the cash rate in 2022, even more borrowers rushed to refinance as their home loans became more expensive.
The number of refinancers and the value of their loans has grown significantly.
In June 2023 this had risen to $507,053, a 28% increase in 4 years.
In June 2023 the total monthly value of refinanced home loans peaked at $22 billion.
More refinancers are leaving their old lender behind
In July 2019 just over half (52%) of refinancers were external refinancers, rather than internal refinancers getting a new loan from their current lender. By July 2023, almost three-quarters of refinancers (72%) were external refinancers.
Our expert says
"A home loan is a gigantic debt. But a properly managed home loan with a reasonable rate and features that suit a borrower's needs is also an incredibly useful financial tool and a means for people to achieve a greater level of financial freedom. In the current environment of higher rates and inflation, refinancing has never been a more important decision."
60% of homeowners were stressed about their home loans in the 3 months leading up refinancing.
This fell to 49% after borrowers refinanced.
This suggests that even refinancing is not enough to fully relieve mortgage pressures in the face of a wider cost of living crunch.
Refinancers are not saving as much money as they could when switching
The average refinancer had a variable rate of 5.01% before refinancing.
After refinancing the average new variable rate was 4.78%, or a 23 basis point reduction.
Assuming a borrower had the average refinancer loan balance of $507,053 and was switching from one 30-year loan term to another, that lower rate would save a borrower $71 a month.
Even after going through the home loan process at least once before, borrowers are in need of support and education when it comes to refinancing and finding the best deal.
No loyalty to lenders when looking for a better deal
76% of refinancers say that the cost of living crisis has pushed them to look outside of the Big Four banks.
Only 8% say they already bank outside the Big Four.
2 in 3 future refinancers (64%) plan to lock in their loan with a different lender.
Mortgage stress drives refinancing, especially among millennials
64% of millennial borrowers looking to refinance are doing so because of cost of living pressures.
The average loan size for a Millennials planning to refinance is $412,581.
This is almost double the average loan size for Baby Boomers ($240,422).
This is likely due to baby boomers buying when prices were lower, and having their loans for a longer time, allowing them to pay off more of their debt.
For homeowners, a proactive approach to financial management is paramount. Regularly reviewing and comparing home loan options ensures alignment with financial goals, while utilising digital platforms and comparison sites can simplify and demystify the refinancing process.
Joshua Godfrey is an insights analyst for Finder. Josh examines the issues currently affecting Australians. He manages Finder's monthly Consumer Sentiment Tracker and quarterly reports. He has a Bachelor of Business and Diploma in Innovation from the University of Technology, Sydney where he studied finance and marketing. See full bio
Joshua's expertise
Joshua has written 22 Finder guides across topics including:
Home loan cashback deals can help you refinance to a cheaper interest rate and get a lump sum cash payment. Compare the latest deals and check your eligibility today.
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