Record number of Australians refinanced homes in May: Finder.com

The highest ever number of Australians refinanced their homes in May, according to Finder.com.

The latest ABS lending data revealed that the total number and value of refinanced home loans peaked in May 2020.

The total value of these refinanced home loans exceeded $15.1 billion in May, up 26% from the previous high of $12 billion in April.

Graham Cooke, insights manager at Finder, said this shows more Australians are taking advantage of rock-bottom rates

“As budgets are stretched, a record number of people are deciding to get a better deal on their largest investment.

“While the value of houses may well drop in the next year, the mortgages on them will not,” he said.

“Historically low interest rates and a lack of investor spending are a double whammy to banks, but a boon for mortgage holders,” Cooke added.

For example, on the average loan of $494,462, Finder analysis shows the average standard variable rate from the Big Four banks is 4.04%.

If that rate were to drop 50 basis points to 3.54%, this would mean $36,287 saved over the life of the loan.

The number of refinanced loans jumped 30% in a month, from 25,998 to nearly 33,712 in May.

The record number comprised both external refinance loans (which involve people switching lenders) and internal refinance loans (which involve customers getting a better rate from their current lender).

External loans reached 21,473 and internal loans reached 12,239.

Despite all-time highs in both internal and external refi categories, 64% of all refinance loans are Australians switching lenders – the largest disparity ever.

Cooke said Aussies are shopping around and it is a good time to be looking for a lower rate.

“With the cash rate at 0.25%, the best home loan rates now start with a 2. If yours does not, it might be time to go home loan shopping.

“Additionally, now is a good time to ask for your bank to go the extra mile. Several lenders are offering to waive fees for new borrowers, and some are even offering extras like offset accounts at no additional cost.”

Some of the market's lowest variable rates in July 2020