The record-breaking boom in mortgage refinancing is expected to gather more steam when a $141 billion wave of fixed-rate home loans expire.
The next chart from the Australian Bankers Association tells the tale.
There are more than 600,000 fixed rate mortgages across the big four banks alone that will expire over the quarters ending in June, September and December:
These expiries will see borrowers shift from ultra cheap fixed rates of around 2% to variable rates above 5%.
Banks are intensely focused on stealing their competitor’s customers in order to continue growing their loan portfolios in the face of subpar new lending.
Barrenjoey analyst Jonathan Mott told The SMH that in this environment, the contest between banks was “all about price”, which was bad for margins but great for borrowers.
“If banks are not competitive with price, they risk seeing their mortgage book run off sharply, potentially setting the business back years”, Mott said.
Therefore, big savings can be made on your mortgage if you shop around for a better deal.
This is where MacroBusiness’ Compare n Save home loan comparison service can assist by enabling you to easily compare hundreds of loans to potentially save thousands of dollars in annual mortgage repayments.
Try the Compare n Save comparison service for yourself. It is quick and easy to use.
If you decide to proceed with an application, the Compare n Save staff will guide you through the process.
For example, if you are seeking a cheaper rate on an existing mortgage, select “I Want To Refinance” and plug in the amount you wish to borrow and the interest rate you are currently paying.
Compare n Save will then show the amount you could save by refinancing.
Once you’ve browsed the various loan options, click the Enquire button, provide your contact information, and Compare n Save will get in touch with you to begin the application process.
A recent survey by Canstar revealed around one quarter of mortgage holders are paying 6.5% or more on their variable rate loans, which is significantly higher than the lowest rate available on the market.
Therefore, consider as an example someone who wishes to refinance a $750,000 loan on a $1 million house with a 6.5% interest rate.
If this borrower refinanced at the lowest rate available, they could save $650 per month or $7,800 annually:
The Compare n Save comparison tool lists hundreds of loans, ranging in cost from lowest to highest.
MacroBusiness will get a portion of the commission if you obtain a loan through Compare n Save, which will help fund the website.
For hundreds of thousands of borrowers who are leaving low-cost fixed-rate mortgages, the upcoming months will be difficult.
But by making sure to pay the lowest mortgage rate on offer, you can at least lessen the pain.
Force the banks to compete for your money.
