Homeowners continue to switch mortgages in near-record numbers as variable rates fall

couple-looking-at-refinancing-home-loan

The lure of low home loan interest rates appears to be continuing to drive Australian property owners to refinance their mortgages in considerable volumes.

According to the latest external refinancing figures released by the Australian Bureau of Statistics (ABS) last Thursday, $16.05 billion worth of home loans were refinanced from one bank to another during October.

While the latest refinancing figure is down on the August peak of $17.78 billion, it’s 33.6% higher than a year ago and still one of the highest levels ever recorded by the ABS.

External refinancing (seasonally adjusted). Source: ABS lending indicators, October 2021

abs-external-refinancing-lending-indicators-october-2021

According to Mozo Banking Expert, Peter Marshall, while there are likely a number of factors motivating mortgage holders to refinance, the abundance of competitive home loan rates is likely a significant factor.

“It’s no coincidence that we’ve seen high levels of refinancing in this low interest rate environment. For many, especially those who may have been stuck on a product with a higher rate, this period has presented a golden opportunity to make the most of the savings that can be gained by switching to a lower rate.”

Home loan rates: The lay of the land

Broadly speaking, home loan rates are close to the lowest they’ve been in years, which is no surprise given that the official cash rate has sat at a record low 0.10% for over a year.

Drilling down, the picture is a little more complicated though, because fixed rates and variable rates are currently moving in different directions.

On the one hand, mortgage lenders have been cutting variable rates with a real verve lately, meaning there’s an abundance of sharp rates available to borrowers. As a result of these recent cuts, the average variable rates for both owner occupiers and investors in the Mozo database are currently the lowest they’ve been since tracking began in 2015.

 

Fixed home loan rates are a different kettle of fish though. Since bottoming out in March, longer-term fixed rates (4 and 5-year terms) have been steadily ticking up, and we’re just starting to see shorter-term fixed rates (1, 2 and 3-year terms) follow suit.

However, as our fixed rate averages graph shows, rates for borrowers looking to lock in are still very low compared to previous years.

How much could refinancing save you? 

That’s a brief snapshot of where rates are sitting at the moment, but why is that important for refinancers?

As Marshall noted, one of the most likely reasons behind the recent uptick in refinancing is existing mortgage holders seizing the opportunity to switch from a higher rate to a lower rate and, in the process, lowering their repayments.

To illustrate the amount refinancers could potentially save by switching to a lower rate, here’s a look at the monthly repayment difference on a selection of rates and loan sizes. These numbers are based on a borrower making principal and interest repayments over a period of 20 years, but you can crunch your own using our mortgage repayment calculator.

$250,000$500,000$750,000
2.25%$1,300$2,601$3,901
2.75%$1,353$2,706$4,059
3.25%$1,407$2,813$4,220
3.75%$1,462$2,924$4,385

Those are just example rates, but there are even lower ones available. For instance, the lowest variable rate in the Mozo database for owner occupiers with an LVR below 80% ($400k loan size, P&I repayments) is currently 1.77% p.a. (1.86% p.a. comparison rate*) with the Super Saver Variable loan from online lender Reduce Home Loans.

Of course, low interest rates are unlikely to be around forever.

As we said above, fixed home loan rates are already on the rise, and the Reserve Bank has made clear it’s intention to start lifting the official cash rate again in the next few years - a move which would almost certainly have a flow on effect to variable home loan rates.

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

Interested to see how much you could stand to save by moving lenders? Get started straight away with our handy switch and save calculator, or head on over to the Mozo refinance home loans comparison table to compare a range of offers for yourself.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 472 home loans.
Last updated 14 June 2024 Important disclosures and comparison rate warning*
  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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 online in minutes.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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 online in minutes.

  • Discount Variable Home Loan

    • Owner Occupier
    • LVR<70%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    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 10% deposit required.

  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • The Better Home Loan Special Offer

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.59 % p.a.
    Fixed 3 years
    Comparison rate
    7.06 % p.a.
    Initial monthly repayment
    $3,190

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

* 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.

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