Refinancing continuing to drive home loan market

Borrowers in search of rate relief continue to switch lenders in droves, with $20.18 billion of loans refinanced in June – the third highest on record.

ABS lending indicator data released today for June shows this was a slight drop of $650 million from the month before, but an increase of $2.26 billion from the same time last year.

Total value of refinancing – June 2023

Source: ABS Lending Indicators May 2023, released 1 August 2023, seasonally adjusted data.

New owner-occupier loans hit the skids but investor lending on the rise

Owner-occupier loans fell 2.8 per cent this month after a noteworthy rise the month before. However, investor lending picked up some of the slack, increasing by 2.6 per cent in June.

Year-on-year, both owner-occupier and investor lending are down by 20 per cent and 15 per cent respectively as the 12 RBA hikes take their toll.

Value of new home loans approved 

Source: ABS lending indicators for June 2023, released 1 August 2023, seasonally adjusted data.

First home buyer numbers continue to plummet

The number of first home buyers taking out their first loan in the month of June fell by 0.8 per cent from the month before and 12.2 per cent from the same time a year ago.

However, while the number of home loans for first home buyers was down, the total value of these loans increased, as buyers are forced to shell out more for their first property due to property price rises.

Owner-occupier first home buyers

Source: ABS lending indicators for June 2023, released 1 August 2023, seasonally adjusted data.

Fixed rates growing in favour

The number of borrowers opting for fixed rate home loans has increased. June saw 8 per cent of new loans secured on a fixed rate, compared to the previous month at 5 per cent.

Value of new loans: fixed vs variable

Source: ABS lending indicators for June 2023, released 1 August 2023, original data.

RateCity.com.au research director, Sally Tindall, said: “It’s fantastic to see refinancing numbers continue to stay as high as they are. While it’s a slight decrease from last month, it’s still the third highest we’ve ever seen.

“With hundreds of thousands of borrowers still to come off their fixed rates this year, we’re likely to see the refinancing boom continue,” she said.

“Significantly, the number of first home buyers has halved since the peak in January 2021. This, along with the increase in loan sizes, shows just how hard it is to get into the property market.

“With increased prices, it’s no surprise that potential first homeowners are having to rely on the bank of mum and dad to own their first home,” she said.

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