Homeowners to save up to $8900 a year
Another rate cut may be on the cards in the coming months but record low interest rates have already got Aussie homeowners fired up and nearly one in three are exploring their refinancing options.
The push for better rates comes as new modelling showed 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.
Sydney homeowners, who currently have the most mortgage debt in the country, would save an average of about $740 per month by refinancing, according to the analysis by Finder.com.au.
Polling by the comparison site also showed 34 per cent of homeowners were planning to refinance. This included the 5 per cent of homeowners who were planning to refinance in the next four weeks and the 11 per cent who would refinance in the next two to six months.
Finder.com.au insights manager Graham Cooke said the rush to refinance may be COVID-19 related.
"The pandemic has made people assess where every dollar they earn goes and refinancing a mortgage can lead to a huge leap in savings," he said.
"Borrowers see record low rates and don't want to be stuck paying more for their mortgage than they need to."
Lower rates meant borrowers could conservatively save almost $5000 a year - more than two times the average full-time salary in Australia, Mr Cooke said.
The savings would be even higher in the major capitals, particularly Sydney.
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 principal and interest payments by switching to a 2.19 per cent rate - the cheapest variable rate currently available.
The lowest three-year fixed rate is 2.14 per cent, nearly 2 per cent lower than the average variable rate, according to Finder.
Low rates have also encouraged first homebuyers.
First homebuyer spending shot to an 11-year high in August, with housing experts revealing cheap credit combined with government incentives helped more people secure homes.
Originally published as Homeowners to save up to $8900 a year