Banking hack that saved Aussies thousands

More Australians than ever previously recorded have been refinancing their home loans as they try to dodge soaring mortgage repayments driven up by successive interest rate hikes.

Figures released by the Australian Bureau of Statistics on Friday reveal more than 26,000 owner occupiers switched lenders in November last year.

The value of owner-occupier refinancing between lenders rose 9.1 per cent to a new high of $13.4bn in the same month.

With the average mortgage rate now 5.86 per cent, RateCity’s Sally Tindall said the refinancing boom was encouraging.

“It means Australians aren’t taking these interest rates lying down and are moving to get better deals,” the research director of the home loan comparison website said.

“While a competitive rate is under 4.7 per cent, a cracking rate is 4.5 per cent or lower – and there’s a handful of them still.”

Ms Tindall said Australians with a $500,000 mortgage who refinanced to a 4.5 per cent rate had managed to save themselves nearly $20,000 over the next three years on average.

The value of owner-occupier refinancing in November soared $1bn from the previous high set in August 2022.

The jump came after the Reserve Bank of Australia raised the cash rate for a seventh consecutive month to 2.85 per cent on November 1.

The central bank has since raised the cash rate to a 10-year high 3.10 per cent, with lenders expecting between two to four further increases in the first half of 2023 given inflation is yet to slow down.

The cash rate, which is the interest paid on overnight loans between banks, guides interest rates set by lenders in Australia.

In another sign successive interest rate hikes are starting to bite, Australian home loan approvals also tumbled to their lowest level since before the pandemic.

Housing lending fell 3.7 per cent in November from the previous month.

Ms Tindall said rising interest rates were shredding people’s borrowing capacity, with many would-be buyers now experiencing a “fear of getting in”.

“They’re looking at the market, waiting to see where they’ll land once the RBA settles on a more neutral cash rate,” she said.