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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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
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$530
70%
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5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
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5.99% p.a.
6.51% p.a.
$2,589
Principal & Interest
Variable
$0
$530
90%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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