Mozo analysis shows refinancing your existing home loan could save you $125,386
8 September 2021
- The leading variable interest rate in Mozo’s database is 1.88% through Reduce Home Loans.
- The average advertised Big Four bank variable interest rate in Mozo’s database is 3.53%.
- Opting for the leading variable interest rate in Mozo’s database instead of the average Big Four bank rate could save you $125,386 over the life of your loan.
- The Latest ABS figures show a jump in value of owner occupier loans being refinanced in June, $17.4bn up from $15.9bn the month before.
- The latest RBA data shows the average variable interest rate for existing owner occupiers is 3.08%, which is 0.29% higher than the rate for new borrowers (2.79%).
With the latest ABS figures revealing a jump in home loan refinancing, Mozo’s analysis reveals an average Big Four borrower who switches to the most competitive rate in its database could tap into a refinancing windfall of up to $125,386 over the life of their loan.
“Something as simple as comparing interest rates and refinancing when you find a more competitive deal can really pay off. If you’re with a Big Four bank you might be able to push them to sharpen your rate but the biggest savings are found beyond the top end of town,” says Tom Godfrey, Mozo spokesperson.
A borrower with an average $400,000 loan banking the leading variable interest rate (1.88%) in Mozo’s database through Reduce Home Loans, instead of the average Big Four bank rate (3.53%), could save around $125,386 over a full 30 year term.
The analysis comes as the latest ABS figures show an increase in owner occupier loans being refinanced in June, $17.4bn up from $15.9bn the month before.
“While it’s encouraging to see a jump in loan refinancing, complacency can be a costly business when it comes to your home loan,” Godfrey says.
While the value of loans being refinanced has increased, the latest RBA data shows existing owner occupiers on variable rate loans are paying significantly higher interest rates than new borrowers. The RBA found existing owner occupiers are paying 3.08%, which is 0.29% higher than the average rate (2.79%) new borrowers are paying.
“With significant savings on offer for borrowers who choose to refinance, getting comfortable with the idea of ending your loyalty to your existing lender could be a valuable exercise.
Earlier this year Mozo’s research found nearly half (45%) of borrowers chose to stay loyal to the Big Four even though there are significant savings on offer. Of those remaining loyal, almost three quarters (73%) felt the big banks were more secure and 27% said they just preferred bigger banks.
Notes: Savings calculations was the difference between the lowest interest rates in the Mozo database, 1.89%, and the big four bank’s average interest rate of 3.53%. Rates were accurate as of 4 August 2021. They were based on 80% LVR on a loan amount of $400,000, which is based on the national median house price.