Refinances have jumped to their highest level in nearly four years, and the numbers are likely to keep increasing.
Analysis of ABS figures by comparison site RateCity has found that 37% of home loans in March were for refinances. The number of refinances during the month was the highest since April 2008.
RateCity spokesperson Michelle Hutchison theorised that the government's unilateral ban on exit fees played a part in the refinancing surge, and predicted that the wave of borrowers switching lenders was set to continue.
"We believe we’re only beginning to see the very start of the impact of these changes and it’s likely that more borrowers will switch lenders more often than in the past," she said.
Borrowers in NSW were the most active refinancers for the month, with 41% of all mortgages written in the state represented by refinancing. Victoria followed with 38%, while Tasmanian borrowers were least likely to be refinancers, at 28%.
Hutchison said the ease of switching lenders would mean banks would have to ramp up their retention strategies.
"We believe that many borrowers who have taken out a variable home loan since July 2011 will switch lenders within the first five years. Switching home loans will be far more commonplace very soon and lenders need to work harder at keeping their customers with better customer service, offering more competitive deals and negotiating on their home loans," she said.