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.

State

Suburb

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.”

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Photo by @mediamodifier on Unsplash.

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