$14 billion refinanced: Mortgage holders continue to switch lenders in droves

australian-suburban-street

New figures released by the Australian Bureau of Statistics (ABS) show that homeowners with mortgages still seem to be making the most of relatively competitive interest rates by switching their loans in considerable numbers.

Issued as part of the ABS’s latest lending indicators release, the figures reveal that $14.3 billion worth of home loans were refinanced with a new lender during the month of January - $9.2 billion from owner occupiers and $5.1 billion from investors.

While that total $14 billion figure was actually down month-on-month, the ABS noted that the amount of refinancing undertaken was still 18.7% higher than at the same time in 2021.

In fact, January’s total is the ninth highest month recorded by the ABS since it started tracking refinancing data back in 2004.

External refinancing values January 2022 (seasonally adjusted). Source: ABS

abs-external-refinancing-figures-jan-2022

Is switching loans worthwhile?

Given that $14 billion worth of home loans were refinanced in January and a record $181 billion were switched during the whole of 2021, some borrowers may be asking themselves: ‘Why haven’t I refinanced my own home loan?’ and ‘Would switching be worth it?’.

Deciding whether or not to refinance is unlikely to be a simple yes or no decision though, as there are a number of factors that can determine whether it’s worthwhile, or even possible.

For instance, some mortgage holders won’t be able to refinance with another lender if their loan-to-value ratio is above 80%. It also might not make financial sense for those who are currently locked into a fixed rate with a substantial break cost fee, or for anyone already getting a competitive rate.

If you are in a position to refinance to a lower rate it could be well worth the effort given the potential savings on offer though - both in terms of money saved on monthly repayments and in total interest over the life of the loan.

Here’s an example using the current average owner-occupier loan size ($618,729) in Australia being paid off over a 20-year period with principal and interest repayments.

Monthly repaymentsTotal interest
2.00%$3,130$132,482
2.50%$3,279$168,150
3.00%$3,431$204,820
3.50%$3,588$242,482
4.00%$3,749$281,121
4.50%$3,914$320,723

Now this is just a typical range of home loan rates available at present, and it’s safe to say that over a 20-year period any mortgage holder’s rate would typically fluctuate a fair bit. The takeaway remains the same though: a lower interest rate could help significantly reduce the cost of the loan over time.

RELATED: Multiple lenders are offering $3,000 cashback to refinance your home loan

Interested in seeing how much you could potentially save by switching loans? Make life easy for yourself by taking our switch and save calculator for a spin, or get to grips with a range of refinancing deals by heading over to Mozo’s dedicated refinance home loan comparison table.

Refinance home loans - March 2022 - last updated 13 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    3.60% p.a.variable for 24 months and then 4.00% p.a. variable
    3.96% p.a.

    Already includes July RBA rate increase. New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

    Details
  • Unloan Variable

    Owner Occupier, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    3.14% p.a. variable
    3.06% p.a.

    For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.

    Details
  • PAYG Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.29% p.a. variable
    3.33% p.a.

    Low variable rate. Ideal for new home buyers or refinancers. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

    Details
  • Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    3.79% p.a. variable
    3.79% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required.

    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.