Australian mortgage holders ‘can’t be bothered’ refinancing to a better deal

Thousand of Aussies are paying out a staggering fortune to big banks they don’t need to and the reason is insane.

The RBA will meet on Tuesday. It may be time to switch lenders.

ANALYSIS

Do you know what exact interest rate you’re paying on your home loan without logging onto your banking app? If you’re like the majority of Australians, you don’t.

Ask your work colleagues the same question and I’ll wager all or most have no idea off the top of their heads.

This is despite the constant discussions about the RBA raising rates over the past few years and now beginning to cut rates.

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I know what my mortgage rate is. But only because I quickly logged on and checked it before beginning to write this article.

It’s 5.59 per cent by the way, which is decent in today’s market. For that I can thank my mortgage broker, who routinely checks in with the bank to ask for a better deal on my behalf. Lucky someone’s switched on.

The RBA meetings and announcements dominate the news cycle as we battle a cost of living crisis and an ever-worsening black hole of mortgage stress, threatening to financially cripple millions of Aussies.

Yet still, we remain disengaged.

Save thousands of dollars … or go back to bed?

An exclusive new Finder survey has revealed 19 per cent of Australian mortgage holders are planning to refinance their loans in the coming six months.

That’s the equivalent of about 627,000 mortgages changing hands from one lender to another.

That sounds pretty engaged, right?

Well, nearly as many survey respondents (18 per cent) said that they needed to refinance, but “couldn’t be bothered”.

Come again? That’s the equivalent of 594,000 Aussie households that are knowingly paying the bank more money than they need to, but think that doing anything about it is too hard.

By refinancing, or even threatening to so that their bank lowers their current rate, these households could save thousands of dollars a year.

Finder’s head of consumer research Graham Cooke said getting a better deal may not be as difficult or time intensive as people think.

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“Generally it’s easier nowadays to refinance than it has ever been,” Cooke said. “You can do it online, and your new lender will handle everything. The ball is in your court as a consumer. Don’t wait for another interest rate cut, give yourself one.”

The survey also revealed that 9 per cent of mortgage holders had refinanced in the previous year; contributing to a total $197 billion worth of home loans that changed lenders over 12 months according to the Australian Bureau of Statistics.

Gen Z were the most desperate to save on their debt, with 34 per cent of respondents in that age bracket planning to refinance in the next six months.

Younger Aussies are the keenest to get a better deal on their debt.

“Thousands of homeowners are struggling right now and are looking for a better deal to relieve their mortgage stress, Cooke said. “The mortgage is typically the largest household expense – and the biggest chance to save.

“Even loans taken out less than a year ago should be reviewed.”

A separate Canstar study has revealed that refinance numbers have already begun to pick up, with ABS statistics indicating more than 100,000 loans had been refinanced in the March quarter; the highest level since September 2023.

Canstar data insights director Sally Tindall said this showed engagement levels were improving.

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“It’s essential for borrowers to recognise the power they hold. Negotiating with lenders, or even switching to a more competitive offer, can translate to substantial savings,” Tindall said. “RBA changes to the cash rate often encourage borrowers to investigate the option of refinancing and if the central bank fires off another cut on Tuesday, we expect these refinancing numbers will continue to rise.”

Finder head of consumer research Graham Cooke.

For those about to refinance

To refinance successfully, Cooke said it was best to avoid some common traps.

1. Don’t look at the rate only: “Some products have very low rates but may not have useful features like an offset, which can save in the long run.”

2. Compare the best offers: “Check online to see what rate you could be getting. Finder has rates as low as 5.29 per cent on its site.”

Call your current bank: “Tell them you are looking to refinance – often they will be willing to give you a deal.”

Be prepared to move: If your current bank doesn’t come to the party, make sure you follow through and refinance.

Think twice about a fixed rate: “Experts in Finder’s RBA Cash Rate Survey are predicting multiple cuts to the cash rate in the coming six months. Fixed rate offers can be lower, but make sure you think they will be worth it.”

Originally published as Australian mortgage holders ‘can’t be bothered’ refinancing to a better deal