More than eight in 10 home owners have not refinanced in years, despite interest rates being at their lowest point in over 50 years.
A consumer review performed by Yellow Brick Road (YBR), which reviewed the situation of 1,000 Australians who obtained a home loan more than two years ago, found that 83% have not refinanced in years.
The review also found that almost half (40%) said they had never refinanced. Another 19% hadn’t refinanced in over five years, 6% had refinanced four to five years ago, 8% had three to four years ago and 10% had between two to three years ago.
, executive chairman of YBR says he finds it hard to believe that so many people are avoiding action, particularly in light of well-publicised historically low interest rates and the potential savings available.
“It’s outrageous to think people are still paying high interest despite the opportunity to pay less. In effect you’re just handing the banks extra money. Many people take the time to drive to the cheaper grocery store just so they don’t pay an extra dollar for milk, yet when it comes to home loans they stick their head in the sand,” he said.
According to recent analysis, completed by Digital Finance Analytics, the average discount applied to new mortgages has steadily increased in recent years. A household who took a loan out in 2010 when the average discount was around 20 basis points would today have access to discounts in the range of 90 basis points.
The top three reasons for failing to refinance, according to the YBR review, included not believing enough money would be saved in the process (31%), thinking the fees and charges would outweigh the benefits (29%) and perceiving the process as too much of a hassle (18%).
These findings present a real opportunity for brokers to educate consumers, says Bouris, as he urges consumers to see a mortgage broker and urges brokers to review their existing clients.
“Costs are high these days. And it makes me angry that banks are profiting from money that should be in the consumers’ hands.
“At Yellow Brick Road, we are striving to educate Australians to empower them to find a better deal. At a time where rates are the lowest in history, everyone should be out there speaking to their lender and mortgage broker about what they can do to save.”