Refinancing smashes the record books as borrowers take the fight to rising rates

The value of refinanced home loans has hit a new record high, as borrowers take action to combat rising interest rates.

Lending indicator data released today from the ABS shows a whopping $19.5 billion worth of mortgages were refinanced in November – the highest monthly amount in Australian history. This figure smashes the previous record set in August 2022 by almost $1 billion. 

Total value of refinancing – November 2022

Source: ABS Lending Indicators Nov 2022, released 13 Jan 2023, seasonally adjusted data.

Meanwhile, new home lending continues to dive

The value of new home loans being approved continued to fall in November, dropping by $953 million, or 3.7 per cent compared to the previous month, according to the ABS data released today.

This is the 10th consecutive month the value of new mortgages has fallen.

Value of new home loans approved in September

Source: ABS Lending Indicators Nov 2022, released 13 Jan 2023, seasonally adjusted data. Annual change is Nov 2021 to Nov 2022. Excludes refinancing.

Source: RateCity. ABS Lending Indicators Nov 2022, released 13 Jan 2023, seasonally adjusted data. Excludes refinancing.

First home buyers continue their retreat

The number of owner-occupier first home buyer loans dropped again in November, down 5.5 per cent from the previous month and down 31.3 per cent from the same time a year ago.

Owner-occupier first home buyers – November 2022

Source: ABS Lending Indicators Nov 2022, released 13 Jan 2023, seasonally adjusted data.

Proportion of fixed loans lifts but still very much on the nose

The proportion of new and refinanced loans on a fixed rate clocked in at 5 per cent this month, in dollar terms.

This is up from the previous month where just 4 per cent of loans were fixed, however, it is still dramatically down from the peak last July when 46 per cent of all new and refinanced loans were fixed. 

Source: RateCity, ABS Lending Indicators Nov 2022, released 13 Jan 2023.

RateCity.com.au research director, Sally Tindall, said: “Australians are being anything but complacent when it comes to their home loans. They’re switching in droves and that’s fantastic to see.”

“The refinance boom has put Australian banks on notice: shape up or customers will jump ship,” she said.

“Borrowers who haven’t yet refinanced should use this competition in the market to get themselves a better deal.

“With nearly $20 billion worth of mortgages up for grabs each month, it’s no wonder banks are falling over themselves to offer up discounts and cashback perks to customers willing to switch.

“The RateCity database shows there are 34 lenders offering cashback deals to refinancers, while 40 lenders have cut new customer variable rates since the hikes began last May 

“Banks need to be on the winning end of any refinancing deal, not the losing end, particularly as the number of new home loans continues to tumble.

“The 10-month-long drop in new home lending mirrors what’s happening in the property market, where prices continue to tumble across the country. 

“Rising interest rates have put a giant question mark over people’s property buying budgets, with many stepping out of the market until they get a clearer idea of where prices will land.

“If you buy a new vacuum cleaner or a fridge and then see it selling for less days later, you generally kick yourself. The idea of doing that with a home has people sitting on the sidelines. 

“The number of first home buyers has also continued to plummet, down by more than 30 per cent from the same time a year ago.

“Falling property prices are likely to tempt many first home buyers into the market over the next 12 months, however, passing the banks’ rigorous serviceability tests will be no mean feat now the cash rate is at a 10-year high and set to keep on rising,” she said.

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