REFINANCING RELUCTANCE: RESEARCH REVEALS THE REASON AUSTRALIANS ARE LOSING OUT ON THOUSANDS
- Written by David Hyman, CEO of Lendi Group
Australians are currently missing out on the full potential of refinancing, with new research commissioned by leading mortgage broker Aussie revealing that despite a majority of Australians (60%[1]) with a home loan saying they are not confident they currently have a good deal, and more than half (53%) believing now is a good time to refinance, over 60% have not reviewed their home loan in the last 12 months, or since getting their home loan.
A further 28% said they are unaware of their current home loan interest rate, despite rates being at one of the lowest points in many years.
The research that polled Australians with a current mortgage, reveals a huge disconnect between mortgage holders’ understanding of the opportunity offered by refinancing, and their willingness to take action at a time of favourable lending conditions and low interest rates.
While most (62%) respondents said they understand the importance of refinancing a home loan on a regular basis, only 1 in 5 (20%) mortgage holders in Australia have acted and refinanced their mortgage in the last 12 months.
As a result, Australians are missing out on the full potential of refinancing right now, internal data from Lendi Group (parent company of Aussie and Lendi brands) shows that refinancers could save around $2,000[2] by dropping less than 1% in their interest rate.
CEO of Lendi Group, David Hyman says, “There are approximately 6 million outstanding mortgages in Australia, and less than 450,000 of those have been refinanced in the last financial year[3], despite unprecedented low interest rates.”
“The gap here is staggering. With three quarters of Australia in lockdown, we understand that refinancing may not be top of mind right now, but by not setting aside a small amount of time to look at their home loan, Australian mortgage holders could be missing out on thousands in savings, which could be really helpful for many families.”
“Given the trend in interest rates over recent years, it’s shocking that over half (54%) of Australians haven’t ever refinanced their current home loan. While this can partly be explained by a knowledge gap when it comes to refinancing and what’s involved, bridging this gap with the help of an expert is not hard. It’s good to remember that reviewing your loan doesn’t always mean refinancing, and you may not even need to change lenders to get a better rate.”
“It’s important to take the first step and speak to an expert who can advise. A mortgage broker can help you understand how your current home loan compares the market, and in some instances help you negotiate a better rate with your existing lender.”
Some of the reasons why Australians are not refinancing include believing it’s too hard or being unsure where to begin the process (22%), not believing they can get a better deal (18%), or concern that they will end up worse off or paying more money (24%).
“It’s important that Australians understand that reviewing a home loan does not have to mean that you will end up worse off. If you don’t understand the process, you can speak to a mortgage broker with no obligations, and they can help you understand your financial situation and what opportunities are available through refinancing,” concludes Hyman.
For more information, speak to the experts or to find a broker head to Aussie.com.au
[1] The research was commissioned by Aussie Home Loans and conducted by PureProfile in accordance with the
ISO 20252 standard. PureProfile surveyed 1,003 Australians 18+ who have a home loan. Surveys were distributed throughout Australia including both capital and non-capital city areas. The survey was conducted online between 14 July and 21 July 2021.
[2] Between 1 May 2021 – 31 July 2021 Lendi customer data showed that on average customers were making a saving of $1,988 when refinancing by 81.00 basis points.
