Homeowners in these suburbs could potentially save at least $69,000 over the life of their loan if they refinance.

Reduce Home Loans Refinance to save

Mortgage holders who are looking for a sign to refinance should consider looking at how their suburbs are performing under the current market conditions before deciding, according to a new study.

Reduce Home Loan’s latest study identified 20 “mortgage belt” suburbs in Australia where buyers would be able to save when they refinance.

Total savings (over the life of the loan) by refinancing
Houses with a mortgage
VIC Point Cook $175,501 11,754
VIC Craigieburn $152,101 11,201
VIC Tarneit $152,101 9,597
VIC Berwick $188,591 8,267
WA Baldivis $98,469 7,808
VIC Sunbury $144,075 7,134
NSW Kellyville $295,560 7,096
VIC Werribee $143,266 6,896
NSW Dubbo $98,405 6,613
VIC Truganina $154,011 6,509
VIC Clyde North $157,910 6,394
WA Canning Vale $144,306 6,236
VIC Melbourne $69,031 6,135
VIC Doreen $158,938 6,107
VIC Narre Warren South $174,359 5,994
NSW Orange $110,922 5,860
VIC Hoppers Crossing $148,041 5,783
VIC Rowville $206,180 5,523
NSW Castle Hill $361,427 5,464
VIC Wyndham Vale $130,133 5,387

In identifying the suburbs, the study assumed that buyers had purchased a home in June 2019 at the median price during that time, borrowed 90% of the purchase price, and had taken out a three-year fixed loan at an average rate of 3.84%.

To calculate the potential savings, the study considered the following factors:

  • Median price of the property in June 2022
  • Estimated equity and outstanding balance
  • A revert rate of 4.75%

The study included 20 suburbs where many houses are still mortgaged — 14 of these suburbs are in Victoria.

Homeowners in all suburbs in the ranking can potentially save at least $69,000 over the life of their loan, assuming they have 27 years left on their mortgage.

Reduce Home Loan general manager Josh Beitz said the study allows borrowers to look at how much borrowers, particularly those whose fixed terms are expiring, can save when they refinance.

“Some borrowers who have reverted, or will soon revert, from a fixed to a variable loan might find themselves on a higher interest rate, which, of course, would be concerning,” he said.

“Lenders always assess borrowers at higher interest rates, so as rates keep increasing, people’s borrowing power will be reduced — as a result, many borrowers will be locked out of refinancing.”

Mr Beitz said borrowers should consider refinancing to a comparable loan with a lower interest rate to prevent them from being mortgage prisoners who are unable to escape the uptrend in interest rates.

“Refinancing now could potentially add up to a saving of tens of thousands or even hundreds of thousands of dollars over the life of the loan,” he said.

“More importantly, it might make the difference to some people being able to keep their home or being forced to sell it in a depressed market.”

Photo by @mediamodifier on Unsplash.

Published 12 Jul, 2022
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