While the value of new loans dipped this month, refinancing has skyrocketed to an all-time high in June.
Latest figures from the ABS show the total value of refinanced loans hit $16.24 billion in June, up $1.37 billion in just one month, in seasonally adjusted terms.
Value of external refinanced loans approved in June
|Amount in June 2021||Monthly change||Year-on-year change||Change from 2 years ago|
$10.84B – highest ever
$5.41B – highest ever
$16.24B – highest ever
Source: ABS Lending Indicators June 2021, released 3 August 2021, seasonally adjusted data. Annual change is June 2020 to June 2021, and 2-year change is June 2019 to June 2021.
Refinancing has risen sharply in recent months, fuelled by record low rates. COVID has also prompted many families overhaul their finances.
In the past 12 months, $151.12 billion worth of mortgages have been refinanced, in seasonally adjusted terms.
Refinanced loans over time
|Last 12 months||Last 2 years|
|Total value of loans refinanced|
|Total number of loans refinanced*|
Source: ABS Lending Indicators June 2021, released 3 August 2021. * Note: the above figures use seasonally adjusted data except for the total number of loans refinanced which is original data.
Potential savings from refinancing to the average 2-yr fixed rate loan - $500,000 loan balance
|Interest over 2 years|
Note: Based on the RBA’s average outstanding owner-occupier rate of 3.08% and refinancing to the average 2-yr fixed rate of 1.95%. Costs include interest and some switching fees. Assumes no extra repayments are made.
RateCity.com.au research director, Sally Tindall, said the record high in refinancing in June suggested mortgage holders were racing to lock in low rates in case they rise.
“At the start of COVID, we saw a spike in refinancing as people rushed to lock in a competitive rate. COVID was a wake-up call for people to get their finances in order, and banks were at the ready, handing out some of the lowest rates in history,” she said.
“Over a year later and we’ve now hit a new record high, although this time, the surge is more likely to be fuelled by a fear of missing out.
“In the last five months, dozens of lenders, including the big four banks, have hiked many of their longer-term fixed rates. Taking these record-low fixed rates off the table has been the push some people needed to refinance.
“However, customers shouldn’t rush out and fix their rate, just because they’re worried about potentially missing out on a good deal.
“Work out what loan suits your finances, then shop around. Whether you opt for a fixed, variable or split loan, if you haven’t refinanced your mortgage recently, there’s every chance you could save thousands,” she said.