Cheaper rates unlock up to $8900 in annual mortgage savings

Mij Gibson Oct 28, 2020

Analysis by Finder.com.au suggests that Sydney homeowners would save an average of about $740 per month by refinancing. This is good news for homeowners in Marsden Park and Sydney who currently have the most mortgage debt in the country.

New modelling has created a push for better rates, especially as it shows that a homeowner paying down the country’s average home loan at the average interest rate would stand to save about $395 per month by moving to the cheapest rate on offer.

Finder.com.au’s insights manager Graham Cooke suggested that the rush to refinance may be COVID-19 related as “people assess where every dollar they earn goes and refinancing a mortgage can lead to a huge leap in savings”

“Borrowers see record low rates and don’t want to be stuck paying more for their mortgage than they need to.”

The lower rates mean that borrowers could save almost $5000 a year. This is more than double the average full-time salary in Australia, says Mr Cooke, and savings would be even higher in the major capitals, particularly Sydney.

According to Finder.com.au a homeowner paying the average variable rate of 3.99 per cent on a median loan of $752,000 would save just over $8900 in principle and interest payments by switching to a 2.19 per cent rate – the cheapest variable rate currently available.

The low rate combined with government incentives has helped more people secure homes claim housing experts.

Polling by Finder.com.au showed that 34 per cent of homeowners were planning to refinance. This included 5 per cent of homeowners who were planning to refinance in the next four weeks and 11 per cent who would refinance in the next two to six months.

Maybe now is a good time for homeowners to take stock and check that they have the best rates available.