- The number of Aussie home loan holders refinancing soared 13.8% in FY23
- Meanwhile, those signing new mortgages fell 20.6%
- It comes amid the 'mortgage cliff', wherein the terms of many fixed-rate home loans signed prior to the RBA's latest hiking cycle are coming to an end in the higher interest rate environment
Home loan refinancing jumped 13.8% year-on-year in financial year 2023 (FY23) while the number of new mortgages being signed slumped 20.6%, new research from PEXA shows.
“We’ve seen refinancing figures continue to trend upwards over the past three years with particularly strong increases since the Reserve Bank of Australia (RBA) began to raise interest rates from May 2022,” PEXA head of research Mike Gill said.
The central bank has hiked the cash rate from its record low 0.1% in mid-2022 to an 11-year high of 4.1% in June 2023.
That’s likely left many borrowers who, having signed onto their home loans when rates were at record lows, found themselves desperate to lower their repayments.
“These borrowers are now rolling off their low interest, fixed-term loans, leaving them open to a better deal,” Mr Gill said.
“The lure of attractive incentives, offered by many of the major banks over the year to entice borrowers to switch lenders, is clearly working.”
See Also: Home loan offers and deals August 2023
More than 450,000 homeowners refinanced their mortgage last fiscal year, the majority of whom signed with a major bank.
Of the five states considered by PEXA’s latest Mortgage Insights Report, the majors held the largest portion of the refinancing market in Western Australia, at 68.7%.
That figure was at its lowest in Queensland, where major banks were behind 60.2% of refinanced home loans.
State | Refinances in FY23 | Year-on-year increase | Median refinanced value |
Victoria | 150,592 | 14.7% | $306,186 |
NSW | 134,411 | 5.3% | $337,075 |
Queensland | 85,713 | 17.4% | $283,166 |
Western Australia | 45,965 | 29.5% | $287,422 |
South Australia | 33,496 | 19.4% | $248,237 |
Source: PEXA Mortgage Insights Report FY23
New home loan commitments tumble
Meanwhile, would-be borrowers might have been spooked by the strength of the market in recent times.
“New lending activity declined across the board in FY23 which reflects the property market normalising to pre-pandemic levels, after an exceptional boom across all mainland states over the previous two years,” Mr Gill said.
The battle between low housing supply and continuing demand from buyers has driven property prices upwards, while the number of new home loans signed last financial year came in a fifth lower than that prior.
House prices climbed 2.3% over the first half of 2023, according to data from PropTrack.
And they’re forecast to stay elevated, with property prices tipped to end the year up to 5% higher than they started it.
More than 481,000 new home loans were signed across the five states in FY23, the majority of which were in Queensland.
The sunshine state saw 125,547 new home loans in FY23 – a 21.5% decrease year-on-year.
Meanwhile, NSW saw 117,529 (down 24%), Victoria had 124,752 (down 20.9%), Western Australia saw 64,626 (down 11%), and South Australia boasted 32,451 (down 21.5%).
Recent lending indicators from the Australian Bureau of Statistics (ABS) found Aussie borrowers were increasingly leaning into fixed-rate home loans in June.
The value of fixed-rate home loans lifted from $2.6 billion in May to $4.5 billion in June.
Comparatively, the value of variable home loan commitments slipped from $51.4 billion in May to $50.5 billion in June.
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 5.95% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
