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

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

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.

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.