Refinancing tidal wave looms

The survey found that the equivalent to 594,000 mortgagors are planning to refinance their home loan by July and that 15 per cent — equivalent to 495,000 borrowers — said they might refinance if interest rates rise even further.

More than half of mortgagors (54 per cent) said they were looking for a cheaper interest rate while 12 per cent wanted an offset account and a further 11 per cent were seeking sign-up cash bonus.

And it is the younger home owners who are looking at their options with almost one in four (23 per cent) Millennial home owners planning to refinance within six months, compared to just 4 per cent of Baby Boomer borrowers.

A total of $17.8 billion worth of home loans have been refinanced over the past 12 months — a 4 per cent increase over the year, according to data from the Australian Bureau of Statistics (ABS).

Richard Whitten, home loans expert at Finder, said lenders should expect an influx of borrowers looking for lower interest rates.

“While most borrowers are looking for a better deal and are not in mortgage stress, thousands of home owners are struggling right now, being forced to fork out thousands more on their mortgages,” he said.

“Many are looking for relief: some are missing meals or bills and are looking at the possibility of losing their homes.”

Following 10 successive interest rate rises, the average mortgage holder will be paying over $13,000 more a year in interest compared to this time last year.

Based on the average loan size of $604,346, the average monthly repayment has increased by a staggering $1,111 a month.

Mr Whitten said many households are feeling financial stress and are looking for how much they can save by switching to a more competitive interest rate.

“Cash flow is a major concern right now and many aren’t earning enough to keep up with interest rate hikes,” he said.

“The mortgage is often the biggest household expense and also the greatest opportunity for savings. Even loans that are less than 12 months old need to be re-evaluated.”