Almost 100,000 mortgages switched to a different lender in the June quarter – the highest level since September 2023 – according to the latest ABS Lending Indicator data.
This equates to an estimated 1,084 refinanced loans every day. The jump in refinancing follows the RBA’s cash rate cuts in February and May. This trend may be sustained after the central bank delivered another 25-basis-point cut in August, lowering the official cash rate to 3.6%, which coincided with Equifax data showing a 9% jump in mortgage intent among first-home buyers in Q2.
Since the start of rate hikes in May 2022, 1.26 million mortgages have refinanced in seasonally adjusted terms. This figure includes some borrowers who may have refinanced more than once or who hold multiple loans.
While Australians with variable home loans are benefiting from the recent 0.75 percentage points of rate cuts, Canstar.com.au says many borrowers could save even more by refinancing.
A borrower with a $600,000 loan and 25 years remaining could potentially save over $12,000 in the next two years by switching to a competitive rate of 5.25%, even after factoring in estimated switch costs of $1,150.
RBA data shows the gap between the average existing owner-occupier variable rate and the average new customer rate is now the smallest on record.
This reflects the fact that borrowers are either refinancing or negotiating with their existing lender, with the data showing the average owner-occupier has avoided 0.82 percentage points of rate hikes over the last three years.
At its widest in October 2022, the average owner-occupier variable rate was 5.09% compared to 4.58% for new customers – a 0.51 percentage point gap. Today, the difference has narrowed to just 0.04 percentage points, with existing borrowers paying an average of 5.79% compared to 5.75% for new customers.
Canstar.com.au data insights director Sally Tindall (pictured) said almost 100,000 mortgages switched lenders in the past three months – more than 1,000 every day – as borrowers sought out better deals following recent RBA cuts.
“This exodus by borrowers away from sub-standard mortgage rates is terrific,” Tindall said. “The RBA might have served up rate cuts on a platter, however, that hasn’t stopped tens of thousands of Australians from seeking out even better deals.”
She said the gap between the average rate for existing customers and new customers had “narrowed to basically nothing,” but warned millions of borrowers were still paying too much.
Tindall expects more than 30 lenders will soon have at least one variable rate under 5.25%, meaning a typical borrower with a $600,000 loan could save over $12,000 in the next two years – even after switch costs – by moving to a competitive deal.
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