THE latest spin coming out of Australia's finance brokers is refinance and you're 'better off' – that's the spin.
The Mortgage & Finance Association of Australia/BankWest Home Finance Survey reveals the majority of consumers who refinance or change loan providers are better off.
Whilst only 814 Australians completed the survey the average satisfaction rating of all respondents who had refinanced was 7 out of 10.
The data also revealed a large proportion of home buyers who had refinanced did so through their existing loan provider.
MFAA’s chief executive Phil Naylor said it is encouraging for both lenders and consumers that only 30% of respondents who had refinanced their home loan changed mortgage providers in the process.
“The fact that just under 70% of these borrowers are not changing their debt provider means the loans aren’t being lost by the lenders. Borrowers are getting a better deal from the same provider — and reaping the benefits. This dispels the myth of churn in the industry.
“However, of the small number of borrowers who did switch lenders, the majority said they were also better off.”
The findings indicated refinancing was price driven. Among those respondents who said they benefited from refinancing, three-quarters (74.5%) were able to get better loan terms and conditions, while 72.3% gained a lower interest rate, and 61.7% benefited from lower fees.
The survey found that home renovation is the most popular reason for refinancing for owner-occupied purchases (31.5%), however, for investors, it only accounted for 6.8% of refinancing decisions.
While 41.9% of respondents with outstanding home loan debt had refinanced within the past three years and 22% within the past 12 months, the level was down slightly from the same survey in November 2006 where 44.7% indicated they had refinanced in the past three years.
These findings correspond with yesterday’s Housing Finance figures from the Australian Bureau of Statistics. They show refinancing commitments in May dropped 3% for owner occupied housing and 2.6% for all established dwellings.
Australian Property Journal
