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Refinancing activity has outpaced that for new loans for the first time since early 2020 as mortgage borrowers navigate the rising interest-rate environment.
PEXA Mortgage Insights Report, which covers loan trends in New South Wales, Victoria, Queensland, and Western Australia, showed that there were more refinances over the first quarter of the year than there were new loan applications.
Over the March quarter, 98,527 refinances were completed in the states, higher than the 96,767 new loans issued during the same period. This is the first time that refinance volumes eclipsed the new loan activity since early 2020.
New loans had not previously gone below 100,000 in a quarter since June 2020, in the early months of the COVID-19 pandemic.
PEXA head of research Mike Gill said financial headwinds are putting a strain on borrowers, which drives refinancing activity across the biggest states.
“This elevated refinancing activity is likely to continue due to the unusually high number of fixed-term loans that will be expiring in the next two years,” he said.
“It will also likely be supported by the central bank strongly flagging the possibility of more rises later this year, in order to bring inflation closer to the target band of 2-3%.”
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
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6.04% p.a. | 6.06% p.a. | $2,408 | Principal & Interest | Variable | $0 | $530 | 70% | Featured Online ExclusiveUp to $4k cashback |
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5.99% p.a. | 5.90% p.a. | $2,396 | Principal & Interest | Variable | $0 | $0 | 80% |
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6.14% p.a. | 6.16% p.a. | $2,434 | Principal & Interest | Variable | $0 | $250 | 60% |
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5.95% p.a. | 5.95% p.a. | $2,385 | Principal & Interest | Variable | $0 | $0 | 90% | |||||||||||
5.94% p.a. | 5.95% p.a. | $2,383 | Principal & Interest | Variable | $0 | $0 | 90% |
Top states for refinancing
Of all states, Victoria witnessed the highest volume of refinancing activity during the quarter, hitting around 35,000 which was up 29.7% from last year.
However, Western Australia posted the biggest gain in refinancing activity, up 35.9% year-on-year to 10,943.
While the median refinanced loan amount across the four states was largely unchanged over the past year, New South Wales still recorded the highest level at $492,000.
Here are the other highlights of the PEXA Mortgage Insights Report:
- All states posted declines in new loan applications over the quarter.
- Despite the decline, Queensland reported the highest volume of residential new loans during the quarter, followed by Victoria and New South Wales.
- The highest average loan amount for new loans was in New South Wales at $852,782. This, however, was down 8.4% compared to last year.
- A total of $54.2bn in new residential lending was issued during the quarter across the four states.
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Collections: Mortgage News
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