Home loan refinance: 94% of mortgage holders could be losing out by failing to switch


Five Reserve Bank rate cuts in the past 14 months have accelerated home loan rate cuts across the board, yet only a fraction of Australian households have taken up the opportunity to refinance their mortgage. 

That’s according to a recent Mozo analysis of lending figures from the Australian Bureau of Statistics and APRA which found that 321,364 mortgage holders - or just 6% - had refinanced their loan in the 12 months to June 2020. 

That means a considerable 4.6 million households didn’t refinance in that period, potentially missing out on thousands of dollars in savings. But according to Mozo Director, Kirsty Lamont, there’s still plenty of opportunity for borrowers to save. 

“In the last six months we’ve seen interest rates fall to record lows, so home loans are essentially on sale, which doesn’t happen very often,” she said.

“This year more than ever, households could benefit from having extra cash in the weekly budget, so now is a great time to review your mortgage and make sure you are getting the best deal possible.” 

While refinancing may be a welcome opportunity for many Australians to save, not every mortgage holder will be in a position to.

Those who have suffered a significant income reduction or job loss in recent months may find it difficult to refinance, given that borrowers will need to meet the same kind of financial checks required of taking out a new loan (essentially what refinancing is).

Seeking a repayment deferral may be an option open to mortgage holders suffering from financial hardship though, as over 800,000 home loans have been deferred since March as a result of COVID-19, according to recent figures from the Australian Banking Association. 

How much could refinancing save you?

In the past 12 months the average variable rate in the Mozo database for owner occupiers has fallen from 3.94% to 3.38% and there have been even larger declines in the fixed rate category.

Of course, these are just average rates. Some of the lowest variable rate offers in our database are currently sitting below 2.40%, while fixed home loans have dropped even lower with a handful of lenders offering rates below 2.00%.

Why does this matter? Well for many homeowners, their home loan rate won’t have kept pace with these declines.  

“It’s safe to say that many mortgage holders are still making repayments at a far higher interest rate than what is currently available. Although customers who are locked into fixed rate offers could face hefty break fees, they need to weigh up the costs of breaking that agreement,” said Lamont.

“One of the biggest benefits of refinancing is paying off your loan faster. The quicker you pay off your mortgage, the less interest you pay overall. Australians who are in a position to do so should really be taking advantage of these record low rates to pay down as much of their principal as possible.”

So just how much could refinancing potentially save you?

The table below shows the potential savings on offer for an owner occupier currently paying the average variable rate of 3.38% on a $400,000 loan with 15 years remaining. The savings and time cut off the loan are based on the borrower refinancing to the lower rate while continuing to make the same repayments. 

Fortnightly savingsTotal savingsTime saved
3.25%$15$5,8472 months
3.00%$44$16,5876 months
2.75%$72$26,71710 months
2.50%$100$36,29514 months

It’s not just a reduced rate that borrowers looking to make the switch can potentially look forward to, as a number of lenders have also launched cashback deals in the thousands of dollars for eligible refinancers.

RELATED: Home loan question: Is a short term fix just what you need?

Ready to check out some of the sharpest deals on offer to refinancers? Check out the offers in the table below, or see how much you could pocket by shifting home loans by taking our switch and save calculator for a spin.

Refinance home loans - last updated 1 March 2024

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

    Package, Owner Occupier, LVR<60%, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.40% p.a.

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.11% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Straight Up

    Obliterate, Owner Occupier, Principal & Interest, <50% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.24% p.a. variable
    6.24% p.a.

    Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.

  • Flex Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.64% p.a.
    fixed 3 years
    6.52% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.


* 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. You can change the loan amount and term in the input boxes at the top of this table. 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.