Nearly one quarter of Australian mortgage holders are considering refinancing their current loan, with cost the major driver for the decision, according to a recent Mortgage Choice survey.
Of the 24% of respondents who were considering refinancing their current home loan, 36% of these have had their home loan for four years of less
“Regarding the reasons given for the desire to refinance, cost was by far the biggest motivator, more than the ability to access additional funds or a preference for fixed or variable rate options,” says Mortgage Choice head of corporate affairs, Belinda WIlliamson.
“Of those considering refinancing their current home loan, 45% of respondents said they would do so to switch to a ‘cheaper’ loan, with cheaper defined as a combination of a lower interest rate, fees and charges.”
Other reasons given for refinancing were also connected to cost-cutting, with 22% of respondents saying they were considering refinancing to lower their repayment level, 21% were looking at consolidating their debts and 19% wanted to lower their fees (including redraw, offset account and annual fees). Rounding out the top five responses was ‘to have better loan features available to me’, at 14% of respondents.
“While cost was clearly top of mind for mortgage holders, it was great to also see some homeowners looking at refinancing to improve their lifestyle. For example, 14% of respondents were considering refinancing to access additional funds for a renovation while 10% were looking at doing so to get access to funds for an investment property purchase. At the same time, 13% were motivated by the promise of having more money for other reasons such as a holiday,” says Williamson.
When refinancing, 62% of respondents said they would consider changing both loan product and lender while 38% said they would stay with the same lender, but switch loan product. The majority of respondents said they would consider choosing a major bank, followed by a credit union and a building society.