It accounts for 88% of Lendi Group's quarterly mortgage activity
Refinancing activity has remained at high levels, with 76% more Australians refinancing than those who took out a new home loan in December, according to new data from Lendi Group.
This same trend was seen over the last three months, with refinancing accounting for 88% of Lendi’s mortgage activity during that period.
Of those who refinanced over the December quarter, NSW accounted for the largest portion at 48%, followed by Western Australia at 22%, Queensland at 15%, and Victoria at 12%. Across age groups, people aged 35 to 44 took out the largest proportion of refinances, at 34%. The next biggest was followed by 45 to 54-year-olds at 25%, and those aged 25 to 34 (18%).
The refinancing boom comes at a time when thousands of Australian borrowers brace for their fixed-term rate to roll off this year, with $130 billion of those loans expiring in the next six months.
“By mid-2023, copious fixed-rate mortgages secured during the pandemic will have reverted to a standard variable rate and borrowers who took out these loans are likely to be facing much higher mortgage payments,” Lendi Group CEO Dave Hyman (pictured above) said.
“Based on current market rates, the revert rate for the majority of these mortgage holders will be approximately 6%, which is 1% higher than the buffer banks used to assess borrowing capacity during the pandemic.”
Hyman said a significant portion of homeowners would see all their disposable income swallowed up by RBA rate rises.
“Pair this with rapidly declining housing prices and shrinking equities and many homeowners are being left facing mortgage prison.”
Hyman urged borrowers to be proactive about their home loan and seek expert help to protect themselves from revert rate shock.
“Reaching out to an expert broker at least 90 days before a fixed term ends will leave borrowers in the best position to tackle the coming challenges and find a loan solution which best suits them and their family,” he said. “If you know your fixed term is ending and you think you could be locked in mortgage prison, speak to your broker as soon as possible.”
It would also help borrowers, Hyman said, to review their household budget in advance.
“Knowing when your fixed rates end and check in on your household budget well before your that time is up so you know where you can save money as your home loan repayments start to go up,” he said.
“If you can’t find room in your budget, speak to your lender early or call on a mortgage expert earlier rather than later – often the situation can be avoided before you have to pay the first dreaded revert rate monthly repayment.”
Hyman has previously warned that the large cashbacks offered by banks to entice new home loan customers could be unsustainable.
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