Yellow Brick Road Gladesville we believe that refinancing your home loan is one
of the most important things you can do. We were shocked by the results of a
recent Yellow Brick
Road survey of 1,000 Australians who obtained a home loan more than two years
ago, finding that:
- 40% of those surveyed said they had never refinanced
- 19% hadn’t refinanced in over 5 years
- 6% had refinanced 4 to 5 years ago
- 8% had 3 to 4 years ago
- 10% had between 2 to 3 years ago
Mark Bouris, Executive Chairman of Yellow Brick Road said
that he found it hard to believe that so many people were avoiding action,
particularly in light of well-publicised historically low interest rates and
the potential savings available
“It’s outrageous to think people are still paying high
interest despite the opportunity to pay less. In effect you’re just handing the
banks extra money. Many people take the time to drive to the cheaper grocery
store just so they don’t pay an extra dollar for milk, yet when it comes to
home loans they stick their head in the sand,” Mark said.
Reserve Bank of Australia data shows the benchmark 1.75% interest
rate is significantly lower than the average of 5.13% that Australians
experienced between 1990 and 2015. The all-time peak was at 17.50% in January
According to recent analysis the average discount applied to
new mortgages has steadily increased in recent years. A household who took a
loan out in 2010 when the average discount was around 20 basis points would
today have access to discounts in the range of 90 basis points or 0.9%.
This combined with the fact that banks have not passed on
the full RBA reduction means that this 2010 loan may today be on a current
variable rate of around 5.3%, whereas rates are now available at around 4.8%,
or better, translating
into a huge opportunity for savings on your current home loan.
But what do these rates mean for
Well, Mark said that even allowing for potential fees and
transfer costs, it is likely that those on a home loan secured a number of
years ago will be able to save each month by switching.
“For those who took out a home loan five years ago, the
average rate after reductions would be 5.3%. The potential savings on an
average $350,000 loan with 25 years remaining could be thousands. For example,
if you refinanced to a rate of 4.8%, you would save $30,660 in interest over
the remaining life of your loan. There are also many lenders offering very
competitive rates as low as 4.1% to 4.2%, if you do your research then you may
find your savings could be significantly more,” he said. This means that something as easy
as contacting your local Yellow Brick Road mortgage broker in Gladesville could
save you plenty for the future.
Why aren’t people refinancing?
to our survey, Australian’s said the top 3 reasons they failed to refinance
their mortgage were because:
1. 31% didn’t believe enough money
would be saved in the process
2. 29% thought the fees and charges
would outweigh the benefits and,
3. 18% perceived the process as too
much of a hassle
“With interest rates dropping to a low that no one in my
generation would have thought possible, it’s crazy to not find out if you can
save. If you don’t have the time, the latest knowledge or the expertise – don’t
feel overwhelmed. There are people out there to help you. Go speak to a
mortgage broker and they will do the work for you. Now is the time to take to
do your research and take action,” Mark said.
So who is at most risk for failing
In our survey we’ve some interesting trends when it comes to
who does and doesn’t refinance:
● The biggest culprits of failing to refinance
in the low rate environment were
Queenslanders with 63% saying they had either never refinanced or hadn’t
for at least 5 years. Following Queensland (QLD) was New South Wales (NSW) at
61%, Western Australia (WA) at 58%, South Australia (SA) following at 57% and
Victoria (VIC) at 55%.
● QLD and VIC both
had the lowest number of residents
refinancing in the past 2 years (14%). SA was next at 18%, WA at 19% and
NSW at 19%.
● 40% of both
males and females had never
refinanced. However a slightly larger amount of females (18%) than males
(16%) had refinanced in the past 2 years.
● 45% of young
adults (25-34 year olds) with home loans said they have never refinanced, whereas
their older counterparts were more likely to have refinanced; 35-44 year olds
(41%), 45-54 (41%), 55-64 (36%) and 65 plus (40%).
● More young
adults had refinanced recently – 28% of the 25-34 year olds refinanced in
the past 2 years. This followed with 22% of 35-44 year olds, 13% of 45-54 year
olds, 11% of 55-64 year olds and 10% of those aged 65 or older.
Mark said that for anyone who hadn’t refinanced in the past
several years this is their wake up call to go out and at least ask the
question about potential savings.
“Costs are high these days. And it makes me angry that banks
are profiting from money that should be in the consumers’ hands. At Yellow
Brick Road, we are striving to educate Australians to empower them to find a
better deal. At a time where rates are the lowest in history, everyone should
be out there speaking to their lender and mortgage broker about what they can
do to save,” he said.
considering us New South Welshmen have one of the lowest rates refinancing,
perhaps now is the perfect time for you to take advantage of these huge
savings. So make an appointment with one of our experienced mortgage brokers at
your local YBR Gladesville branch today.