A recent surge in switching among property investors has helped lift the amount of mortgage refinancing being undertaken to record levels.
Lending indicators released by the ABS show mortgage holders refinanced $17.8 billion worth of home loans to another lender in August – the highest ever recorded by the ABS.
Owner-occupier refinancing dropped by 1% month-on-month, though it still reached over $11 billion during August. But refinancing among investors rose 11.5% to a new high of $6.53 billion.
Refinancing levels have more than doubled since October 2018. The Reserve Bank has cut the official cash rate six times over that period and lenders have responded by dropping home loan rates.
Since October 2018, the average variable rate in the Mozo database (P&I repayments, 80% LVR) has fallen by 121 basis points for owner-occupiers and 125 basis points for investors. As a result, existing mortgage holders have had the opportunity to switch to a lower interest rate.