All mainland states saw new lending drop 12.7% over the last year, according to data compiled by property settlements platform PEXA.
New South Wales and Victoria saw the largest falls in aggregate lending, although Western Australia and Queensland remained largely steady.
For the first time since the pandemic, median loan values fell nationally.
Again, New South Wales and Victoria saw the biggest drops, recording median home loan amounts of $647,000 and $497,000 respectively.
According to PEXA, the declines indicate a slight improvement in affordability in those markets although it noted Sydney’s median loan value rose towards the end of the year.
In Queensland, the median loan value increased to $464,000 with the state also recording the highest volume of sale settlements during the year.
Refinancing values climbed 11.4% higher last year, indicating Australians took to the market to find better home loan deals.
The jump coincided with interest rates rising and homeowners coming off the surge in fixed-rate loans locked in during the previous two to three years.
The Australian loan market saw a frenzied period with many lenders offering generous cashback offers and attractive interest rates in a bid to sign up homeowners on new deals.
Refinancing frenzy cools
There has since been a marked fall in cashback products particularly in the second half of 2023.
This is in line with the PEXA data showing refinancing slowed nationally in the final quarter of the year.
PEXA’s head of research Mike Gill said this suggests refinancing activity might have peaked.
Historically, refinancing steps up when interest rates rise but there was no spike after the November 2023 rate hike to 4.35% after a three month pause in increases.
“The timing of the rate rise, being close to the end of the year, may have hindered many owners from taking action before the Christmas break,” Mr Gill said.
January clearance rates jump
In other data, housing sales activity looks to be bouncing back in 2024 after a late-2023 lull.
The latest CoreLogic figures show auction clearance rates across the capital cities in January hit their highest level since June 2023.
The preliminary clearance rate last month was 76.2%, a big jump on the mid-60s figures recorded in capital cities in December last year.
CoreLogic suggested stronger auction outcomes could reflect a boost in buyer sentiment with forecasts of an earlier-than-expected interest rate cut becoming more widespread.
Higher clearance rates can also indicate a better fit between buyer and seller pricing expectations.
Image by Blake Wheeler on Unsplash
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