Home loan refinancing surges

A record number of mortgage holders refinanced in May, as borrowers sought a better deal amid economic uncertainty.

A couple assess competing home loan offers. Picture: iStock.

A record number of mortgage holders refinanced in May, as Australians overhauled their household outgoings amid the coronavirus crisis.

According to the latest Austraian Bureau of Statistics data, the number of mortgage holders who refinanced jumped 30 per cent from April to May.

Of those who refinanced, 64 per cent switched lenders - a record proportion, according to analysis by comparison website Finder.

The total value of these refinanced home loans exceeded $15.1 billion in May, up 26 per cent from the previous high of $12 billion in April.

“As budgets are stretched, a record number of people are deciding to get a better deal on their largest investment,” said Finder insights manager Graham Cooke.

“While the value of houses may well drop in the next year, the mortgages on them will not.

“Historically low interest rates and a lack of investor spending are a double whammy to banks, but a boon for mortgage holders.”

Mr Cooke urged mortgage holders who haven’t yet shopped around for a better interest rate to do so now, with the cash rate at an all-time low.

“Now is a good time to ask for your bank to go the extra mile,” he said.

“Several lenders are offering to waive fees for new borrowers, and some are even offering extras like offset accounts at no additional cost.”

Many Australians also limited their credit card spending and paid down credit card debt in May, amid nervousness about Australia’s economic outlook.

Consumers spent $5.82bn less on their credit cards in May of this year compared with the same month a year ago, according to data released by the RBA. The number of credit card accounts dropped by 1.22 million year-on-year.