Most Australians wouldn't consider refinancing their home loan unless they could achieve at least $3,000 in annual savings, according to Loan Market.
An online poll by the aggregator found 51% of its 412 respondents said that $3,000 was the number which would entice them to switch, while 49% pegged a figure between $500 and $2,999.
Loan Market spokesperson, Paul Smith, says that low interest rates and discounts available from lenders have made refinancing the strongest segment of the home finance market over the past two years.
“With a downward outlook on interest rates over the past two years, there’s been continual pressure on lenders to make the right moves to remain competitive. This has created saving opportunities for home owners who have negotiated between lenders - or even their own lender - for a better deal.”
He says the survey results revealed that $3,000 was likely the ‘sweet spot’ to entice borrowers to switch their home loan, but that switching your home loan was a decision that required consideration of the longer term goals and financial situation of the borrower.
“On a $300,000 loan, a rate reduction of 75 basis points may only save you $1,100 annually, but depending on the product you switch in or out of, you could save additional money by having new features on your home loan such as an offset account.”
Smith says the growing popularity of mortgage brokers, who write nearly 50% of all home loans in Australia, makes refinancing an easier process for home owners.
“Obviously home owners want to be paying the lowest interest rate they can. What a mortgage broker can do is find or negotiate that low rate and also ensure that the loan product matches the borrowers’ individual circumstances and financial goals.”