Aussies could save more than $6,000 by refinancing their home loan to a lower rate, new analysis has found.
According to Canstar’s research, mortgage holders who switch from the average variable rate of 5.98 per cent to the lowest ongoing variable rate of 4.29 per cent can save themselves $520 per month or $6,240 per year. This is based on a borrower with a $500,000 loan over 30 years.
Canstar finance expert Steve Mickenbecker said the difference between the average and lowest rate was now 1.69 per cent.
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“That’s more than half of the total rate increase since May,” Mickenbecker said.
“The $6,000 saved won’t cover every living cost, but it will cover a lot and take some stress out of living. It’s too big to ignore.”
A record $19.5 billion worth of mortgages were refinanced in November - the highest monthly amount in Australian history.
“If you have held your home loan for a few years or more, property price rises will mean you have built up healthy equity in your house. Lenders love that, and it’s time you used it to save money this year,” Mickenbecker said.
Home owners face $81 hit
The Reserve Bank lifted the official cash rate 0.25 per cent to 3.35 per cent today. The average mortgage holder will now be forking out an extra $81 per month on the average $500,000 loan, Canstar said.
In total, mortgage repayments will be an extra $11,628 compared to April last year. This would be around $350 more than the combined cost of all household bills, including insurances, electricity, gas, NBN and mobile.
“There is no line in the household budget that is hurting borrowers more than the home loan. Nor is there one that has the potential for greater savings,” Mickenbecker said.