Borrowers keen to refinance
More than 14,000 home buyers switched their mortgages to other financial institutions in December 2002 to get lower interest rates, the Australian Bureau of Statistics says. At the same time, fewer people bought homes as the price boom forced low-income earners and young people out of the market.
Twenty-five per cent of all housing loans in December was for refinancing with different lenders – up from only 15 per cent in mid-1999. Total lending in December for housing was a record $8.6 billion. Renovations are booming with lending for this purpose almost doubling from $745 million in the December 2000 quarter to $1,370 million in the December 2002 quarter.
Wizard's Mark Bouris says enquiries about refinancing now make up one-third of the lender's business as home buyers think about reducing their mortgage repayments and new buyers look for better deals. Mr Bouris also said anecdotal evidence suggests mortgage brokers are refinancing in order to get commissions, which is not necessarily in the best interests of the borrowers. The Consumer Credit Legal Service also warned home buyers to be cautious on refinancing, saying some mortgage brokers make inappropriate recommendations.