The share of new owner-occupier loans that were for refinancing existing mortgages, rather than for buying or building a new home, reached 36 per cent of the total in April. That is the highest share since the records began in 1991, as the graph shows.

Other surveys suggest even more are thinking about ditching their bank for a rival. More than half of the customers surveyed by comparison website Finder  in June were considering switching banks, or had done so, and a key reason was the very low fixed interest rates.

Although we have a banking oligopoly, this is how competition is meant to work. Charles Littrell, an executive  at the Australian Prudential Regulation Authority, put it well at  a financial conference recently.

"If any of you are paying more than 4 per cent on your mortgage, please get off your backside and go talk to a home loan broker," he said. "People who are borrowing half a million or more on their home loan should not ignore the price of their home loan."

He is right. Banks are offering deep discounts off their advertised rates, sometimes giving borrowers up to 1.5 percentage points less than the headline rate. Fixed rate loans  are as low as 3.69 per cent, and the proportion of customers fixing is its highest in 2½ years.

Switching banks, or threatening to as a negotiating tactic, can save thousands for a typical mortgage customer.

But before rushing to refinance, or locking in a fixed rate loan, it's worth being aware of a few common mistakes.

It is easy to fall into a trap if you're taking out a fixed rate loan, which means you are taking a bet on the future direction of interest rates.

AMP financial adviser Andrew Heaven says the main reasons a customer would consider fixing are if fixed rates are lower than variable rates, or if a rise in interest rates would hurt your financial situation.

"If variable rates are lower than fixed rates, you are effectively paying a premium for the comfort of knowing that fixed rates are not going to rise during the term of the fixed rate loan," he says.

Even if you've decided to fix, there are still a couple of common traps to avoid: fixing too much, and fixing for too long.

The downside of a fixed loan is that it's harder to make extra repayments beyond the minimum, which you may want to do if your income rises, or interest rates fall. For this reason, Heaven says it makes sense to think about how much you might be able to repay over the period of the fixed term – and do not fix this amount.

"If you make the decision to fix, then fix the amount that you cannot afford to pay off during the term of the fixed rate loan," he says.

Failing to do this could leave you unable to make extra repayments on your loan in the future, which can help you pay off the loan faster. (The caveat is that some banks will allow you to pay off up to $10,000  a year beyond the minimum with a fixed loan.)

Another common trap is fixing for too long, as getting out of a fixed rate loan before its term ends can come with a hefty break fee.

Banks will offer fixed rate loans for five years, or longer, but a lot can happen to change a financial situation in that time: such as changes in job or personal circumstances.

Aside from the risks with fixed rates, the other risk to bear in mind if refinancing is not to over-borrow.

Banks use refinancing as a way to allow borrowers to top up their loan and borrow more, perhaps for renovations. If you are doing this, it is important to remember that interest rates are abnormally low, and they will eventually rise.

The way home loan interest is calculated, interest rate rises have a proportionately larger impact on your repayments when rates are at very low levels, as they are today. Borrowers should therefore make sure they would be able to handle rates that are well above the cut price offers in the market today.