The Reserve Bank of Australia’s (RBA’s) indicator lending rates show that the average discount mortgage rate was only 3.65% in October and the average 3-year fixed rate was only 2.39%:
The wide gap between variable and fixed rates, alongside the bevy of fixed mortgage deals below 2%, is projected to cause a mortgage refinancing boom according to RateCity:
According to RateCity analysis, there are now some 30 lenders offering home loan rates below 2 per cent.
“It’s no longer just online lenders with low rates. The bigger banks are now starting to steal their thunder offering up fixed rates under 2 per cent,” RateCity.com.au research director Sally Tindall said.
“For the average borrower, refinancing to a low fixed rate could save them thousands of dollars a year…
Finder analysis found one in three borrowers plan to refinance over the coming 12 months…
“Borrowers see record low rates and don’t want to be stuck paying more for their mortgage than they need to,” Finder insights manager Graham Cooke said.
“The pandemic has made people assess where every dollar they earn goes and refinancing a mortgage can lead to a huge leap in savings.”
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According to the ABS, mortgage refinancings were already running at record high levels – up 38% year-on-year:
The mortgage refinancing boom will inevitably continue as borrowers in Australia take advantage of record low rates and shift away from variable to fixed rate mortgages.
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Aussie borrowers would be crazy not to take advantage of the insanely cheap mortgages on offer.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
