Refinancing could save homeowners over $20,000 in two years
An estimated 1.2 million Australian homeowners may be in a position to save thousands by refinancing their mortgage, new analysis from broker network Aussie suggests.
Rising property values have helped improve loan-to-value ratios (LVRs) across much of the country, increasing borrower equity and unlocking potential savings. According to Aussie, this shift could translate into a collective $1.2 billion in possible cost reductions if borrowers move to lower-rate products.
In Queensland, recent capital gains mean that more than 90% of mortgage holders may now qualify for refinancing, Aussie said.
Refinancing activity had peaked during a period of rapid rate increases, but the pace has since slowed, according to Canstar’s research director Sally Tindall. “That started to come off the boil,” she told The Australian, though recent weeks have shown signs of a resurgence.
According to the Mortgage Choice Home Loan Report for the March 2025 quarter, Australians are becoming more optimistic and increasingly open to refinancing, encouraged by signs that interest rates are starting to ease.
Tindall noted that switching to another lender can deliver significant financial benefits. “You actually have to move your mortgage down the street if you want to get one of those ultra-sharp competitive mortgage rates,” she said, adding that banks often reserve the lowest rates for new clients.
Following the Reserve Bank of Australia’s decision this week to hold rates steady, Aussie broker Benjamin Vagg said borrowers could still find savings by reviewing their options. “Many, many people just by doing that quick shop around will be able to realise a 25-basis-point cut,” he said.
Finder’s head of consumer research, Graham Cooke, estimated the typical borrower could save roughly $1,200 annually by switching. “The interest rate of your home loan is the most important number in your life,” he said, urging borrowers to stay alert to changing rates and offers.
Cooke added that equity growth gives homeowners more bargaining power. “The further you are down the home loan repayment journey, the more leverage you have,” he said.
Examples provided by Canstar show the potential financial upside. A borrower with a $600,000 loan could save over $12,000 across two years by switching from a 6.61% rate to 5.50%, even after accounting for $1,150 in switching costs. For a $1 million loan, the two-year saving could exceed $20,000, equating to $680 a month in reduced repayments.
While lower rates are attractive, Cooke also warned borrowers to factor in the full loan package. “Some lenders with the lowest rate won’t offer something like an offset account … which can save you a lot in the long run,” he said. He added that cashback incentives could further enhance the value of switching.
For owner-occupiers with a clean repayment record, a competitive rate currently sits around 5.5%, according to Tindall. “If you are sitting on a mortgage and paying a rate that starts with a six… you are paying too much,” she said.
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