Australians are being urged to consider refinancing their home loans as new data shows almost a quarter of mortgage holders are paying interest rates at least 1.8 per cent above the best deals on the market.
Canstar analysis reveals 24 per cent of loans are priced higher than 6.5 per cent after a record run of rate hikes from the RBA.
But borrowers with a 30-year, $500,000 loan could save $570 a month by switching to a better deal, Canstar finance expert Steven Mickenbecker told The New Daily.
There are currently 57 deals available with interest rates between 4.51 and 5 per cent – a steep discount on the market average, he said.
“The longer you’ve been in a loan without renegotiating, the higher the rate you’re likely to be paying,” Mr Mickenbecker said.
“Too many people are paying rates that are, frankly, out of date.”
Near-record numbers of households have refinanced home loans this year.
Tough competition among lenders has created a range of deals for borrowers with some equity in their property.
“The fact is that rates have gone up by 3.5 per cent in 12 months,” Mr Mickenbecker said.
“Lots of people can claw back 2 per cent of that by refinancing, covering almost half of the RBA increases.”
The best rates on the market are available to home owners with a loan-to-value ratio of 60 per cent or less, Mr Mickenbecker said.
However, even more recent home owners can get a better deal if they haven’t refinanced since the COVID-19 shock.
Many long-standing home owners with relatively small outstanding mortgages are “complacent” and sitting on rates of 8 per cent or higher, Mr Mickenbecker said.
And because banks are “falling over themselves” to get these long-standing owners, substantial discounts are on the table for those willing to ask for a better deal.
Canstar data shows there are more than 300 mortgage deals in Australia with rates of 6 per cent or less, and 102 between 6 and 6.5 per cent.
Monthly repayments on these loans range between $2608 and $3079, assuming a 30-year, $500,000 mortgage, paying principal and interest.
That’s far less than the $3756 being paid by those on rates above 8.01 per cent.
Even Australians who prefer to stick with the big four banks could save, with these rates currently hovering around 5.3 to 5.4 per cent after the March hike.
