How often do people shop around for home loans?

Purchasing a home is no small commitment.

At Woolworths Team Bank, we encourage you to take note of the changing market and ensure you are always on the front foot when it comes to securing a new home loan for your situation. Reducing your rate by even just one percent can save you a few hundred dollars a month, or tens of thousands of dollars over the life of the loan.

Are many Australians considering shopping around for home loans?

There is considerable noise in the media declaring it to be a seller’s market1 across the country, which means two things for Australian households:

  1. Sellers often need to repurchase, whether it’s to upsize, downsize or relocate;
  2. Buyers may be spending more in a competitive market, meaning home loan rates and inclusions play a critical role in the ability to break into the market.

Data from the Australian Bureau of Statistics (ABS) supports these movements, claiming one in four Australians intend to renovate, build, or buy a home2 in the next 12 months.

Indeed, while the housing market is booming with just under 40,000 dwellings3 constructed or purchased in April 2021, many owner occupiers and investors are refinancing their existing home loans to take advantage of better rates in the market. The ABS attributes attractive fixed rate loans as the cause for a sharp increase in refinancing commitments, where customers have changed their lender to refinance their home loan.4

Why make the switch?

The decision to switch home loans or lenders can save households tens of thousands of dollars over the life of the loan. However, the longer you hold off on switching, the more interest you’ll pay. Are you missing out on great savings for your future?

The Australian Competition and Consumer Commission (ACCC) reported a significant gap5 between new home loan rates and those that were established some five to ten years ago, and provides a simple example of how a typical home loan holder can keep a cool $17,000 in their bank just by shopping around. We’ve shared it here for you …

“If a borrower with a home loan of around $250,000 switched to a home loan with an interest rate 58 basis points lower than their existing loan, they would save over $1,400 in interest in the first year. Over the remaining term of the loan that borrower would save over $17,000 in interest in net present value terms.”

(ACCC; Home Loan Price Inquiry; November 2020)

Are you one of the many Aussies thinking of shopping around?

Make your home loan work harder for you with our tips below …

Exploring a new home loan – when should you consider refinancing?

The ABS estimates two per cent of Australians are struggling to pay their mortgage6, exacerbated by the effects of COVID-19, and it cites financial hardship relating to mortgage repayments as one of the key stressors Australian families are facing.

These statistics highlight how important it is to get your home loan through a provider who offers a fantastic value product (e.g. low interest rates); meaning more money in your pocket to pay for essentials such as fuel, groceries, and the kids’ school fees (and maybe even a holiday!).

Paying off a mortgage? Wondering if there is a better rate out there for you? Here are the three biggest points to consider when weighing up the decision to switch to a different mortgage commitment:

  • Have you looked into refinancing in the last 4-5 years? On average, an Australian borrower changes their loan once in a four to five year cycle to access the best deals.7 With record low rates on offer at the moment, every day you stay on a higher rate is another day you’re paying too much!
  • Has your financial situation changed? Whether you have more cash to throw at your loan, or you need some breathing room, speaking with a lender about your current situation can help you make the best decision for your household.
  • Has your fixed rate mortgage term expired? If your fixed rate term has come to an end, shopping around is a great way to lock in a fantastic new rate and have peace of mind for the next few years.

Is it time to switch your mortgage?

There are many benefits in switching to a different home loan. The obvious one is that you’ll pay less to the lender (so there’s more cash in your wallet!), but other benefits may also include more flexible payment options, a redraw facility, better customer service when you have a query, and much more.

Remember that as a team member in the Woolworths Group of companies, you have access to great (and exclusive!) lending options with Woolworths Team Bank.

We are proud to offer competitive home loans and will ask you the right questions to find a loan to suit your needs – for now and the future.

If it’s time you switch home loans, or you’re ready to buy a property, speak to our friendly team today.

Contact our team today to learn more.

Sources
[1] It’s a sellers’ market as Australian property prices rise and buyers line up, news.com.au, (accessed 22 June 2021).
[2] Household Impacts of COVID-19 Survey, April 2021, Australian Bureau of Statistics [website], (accessed 22 June 2021).
[3] Lending Indicators, Australian Bureau of Statistics [website].
[4] Lending indicators, Australian Bureau of Statistics [website], (accessed 22 June 2021).
[5] Home Loan Price Inquiry Final Report November 2020, Australian Competition and Consumer Commission [website], (accessed 22 June 2021).
[6] Household Impacts of COVID-19 Survey, May 2021, Australian Bureau of Statistics [website], (accessed 22 June 2021).
[7] How often should you refinance?, RateCity.com.au [website], (accessed 22 June 2021).

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