Brick Road Tamworth believes that there are huge savings to be had by
refinancing, and as your local mortgage broker, we are here to help. We were
assured of this when Yellow Brick Road survey reviewed the situation of 1,000
Australians who obtained a home loan more than two years ago. Here are some of
- 40 per cent of those surveyed said they had
- 19 per cent hadn’t refinanced in over five years
- 6 per cent had refinanced four to five years ago
- 8 per cent had refinanced three to four years
ago and 10 per cent had refinanced between two to three years ago.
Mark Bouris, Executive Chairman of Yellow Brick Road said
that he found it hard to believe that so many people were avoiding action,
particularly in light of well-publicised historically low interest rates and
the potential savings available.
“It’s outrageous to think people are still paying high
interest despite the opportunity to pay less. In effect you’re just handing the
banks extra money. Many people take the time to drive to the cheaper grocery
store just so they don’t pay an extra dollar for milk, yet when it comes to
home loans they stick their head in the sand,” Mark said.
Reserve Bank of Australia data shows the benchmark 1.75 per
cent interest rate is significantly lower than the average of 5.13 per cent
that Australians experienced between 1990 and 2015. The all-time peak was at
17.50 per cent in January of 1990.
According to recent analysis the average discount applied to
new mortgages has steadily increased in recent years. A household who took a
loan out in 2010 when the average discount was around 20 basis points would
today have access to discounts in the range of 90 basis points or .9%.
This combined with the fact that banks have not passed on
the full RBA reduction means that this 2010 mortgage may today be on a current variable rate
of around 5.3 per cent, whereas rates are now available at around 4.8 per cent,
Mark said that even allowing for potential fees and transfer
costs, it is likely that those on a home loan secured a number of years ago
will be able to save each month by switching.
“For those who took out a home loan five years ago, the
average rate after reductions would be 5.3 per cent. The potential savings on
an average $350,000 loan with 25 years remaining could be thousands. For
example, if you refinanced to a rate of 4.8 per cent, you would save $30,660 in
interest over the remaining life of your loan. There are also many lenders
offering very competitive rates as low as 4.1 to 4.2 per cent, if you do your
research then you may find your savings could be significantly more,” he said.
Why aren’t people refinancing?