How much could you pocket by refinancing your mortgage in 2023?

Paying off a home loan ain’t what it used to be. Now that average variable interest rates have cleared the 6.00% mark in the Mozo database, many borrowers have scrambled to jump ship from mortgage repayments that have risen by hundreds of dollars a month. 

In fact, according to the Australian Bureau of Statistics (ABS), Australians refinanced $19.9 billion worth of home loans in February 2023 alone – $3 billion more than the same time last year. 

“Lenders will often make sharper rates available for new customers than they do for their existing customers,” explains Mozo banking expert Peter Marshall. 

“Now is a great time to check out some of those sharper rates and see if you can do better than what you’re on currently. And you might even be able to pick up one of the great cashback deals that are available, too.”

But because interest rates have flown sky-high, comparing offers has become more vital than ever. While the average variable rate is well above 6%, the best rates tracked by Mozo still lean in the 4 - 5% range. So how much more money could you pocket if you refinance your mortgage? 

Let’s dive in.

It’s important to remember that because interest rates have risen so much, not everyone will be in a position to refinance. Rate hikes affect property prices, too, so many homeowners will have lost equity in the last year, which means they may not qualify for the minimum 80% loan-to-value ratio many lenders require to refinance. 

Your lifestyle and spending habits may have also changed due to the rising cost of living, which means you will have to take stock of how you spend your money before filing the application. Spending more, and saving less? You could look extra risky to a lender. 

There may also be fees associated with refinancing, such as discharge or application fees. These extra costs can add up more if you break a fixed home loan early. 

That being said, if your financial ducks are in a row and you know why you should refinance, it can make a great option to dodge expensive monthly repayments. 

For example, if you refinanced a $500,000 principal & interest loan with 20 years left on your term, here’s a breakdown of how much you could theoretically save.

At the time of writing, 4.89% p.a. is the lowest variable interest rate in the Mozo database. 

As the table shows, your interest rate can make a significant difference in how much you pay for your home loan overall. Even dropping 1% could save you thousands a year. 

To see how much you could pocket by refinancing, try our switch and save calculator. 

Compare refinancing home loans below.