83% Aussies with home loans not taking advantage of falling rates

Despite the historic low interest rates, a surprisingly large number of Australians are not taking advantage of the favourable environment. According to a new research by Yellow Brick Road, 83% of Aussies with a home loan have not refinanced in years.

The survey reviewed the situation of 1000 Australians who got their home loan more than two years ago. 40% of the people surveyed admitted that they have never refinanced at all.

Mark Bouris, Executive Chairman of Yellow Brick Road, said that he found it hard to believe that so many people were avoiding action, particularly in light of well-publicised historically low interest rates and the potential savings available.

“It’s outrageous to think people are still paying high interest despite the opportunity to pay less. In effect you’re just handing the banks extra money. Many people take the time to drive to the cheaper grocery store just so they don’t pay an extra dollar for milk, yet when it comes to home loans they stick their head in the sand,” he said.

The current interest rates in Australia are at their lowest point in over 50 years. RBA data shows the benchmark 2% interest rate is significantly lower than the average of 5.13% that Australians experienced between 1990 and 2015.

According to Mr Bouris, even after taking potential fees and transfer costs into account, households can secure monthly savings by switching their home loan.

“For those who took out a home loan five years ago, the average rate after reductions would be 5.3%. The potential savings on an average $350,000 loan with 25 years remaining could be thousands,” he said.

“For example, if you refinanced to a rate of 4.8%, you would save $30,660 in interest over the remaining life of your loan.”

According to the survey, the main reasons for not refinancing were:

  • Not believing enough money would be saved in the process (31%)

  • Thinking the fees and charges would outweigh the benefits (29%)

  • Perceiving the process as too much of a hassle (18%)

Home loan comparisons on Mozo - last updated 13 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Variable Home Loan 70

    interest rate
    comparison rate
    Initial monthly repayment
    3.10% p.a. variable
    3.12% p.a.

    Affordable home loan rate for buyers or refinancers.. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 30% deposit required.

    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.