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- Cashback exodus rattles refinancing market + investors ramp up new lending in time for spring
Cashback exodus rattles refinancing market + investors ramp up new lending in time for spring
The value of refinanced mortgages plummeted in the month of September, dropping to $18.53 billion, the lowest level in almost a year.
The latest ABS lending indicator data for September, released today, shows the value of refinanced loans dropped by $1.56 billion from the previous month and down over $3 billion compared to the peak in July 2023.
The drop comes on the back of a mass exodus away from cashback deals offered by lenders to encourage people to switch.
In March of this year, 35 lenders offered cashback incentives to refinancers. Today there are just 15, with CBA ditching the perk at the end of May, and Westpac and NAB ending their offers on 30 June.
Total value of refinancing – September 2023
| Sep-23 | Monthly change | Year-on-year change | Total since start of hikes May 22 – Sept 23 |
| $18.53 billion | -$1.56 billion
-7.8% | +$276 million
+1.5% | +$327.16 billion |
Source: ABS Lending Indicators Sept 2023, released 2 Nov 2023, seasonally adjusted data.
Source: ABS Lending Indicators Sept 2023, released 2 Nov 2023, seasonally adjusted data.
Investor lending continues to ramp up
Investors drove the modest increase in home lending in the month of September, with the value of new investors loans rising by 2.0 per cent from the previous month and up by 2.6 per cent from the same time a year ago.
Owner-occupiers took a back seat this month, dropping by 0.1 per cent and down a significant 8.4 per cent from last year.
Value of new home loans approved in September
| Value | Monthly change | Year-on-year change | |
| TOTAL | $25.01 billion | +$159 million
0.6% | -$1.24 billion
-4.7% |
| Owner-occupier | $16.06 billion | -$14 million
-0.1% | -$1.46 billion
-8.4% |
| Investor | $8.95 billion | +$173 million
+2.0% | +$227 million
+2.6% |
Source: ABS Lending Indicators Sept 2023, released 2 Nov 2023, seasonally adjusted data.
First home buyers
Owner-occupier first home buyers rose in the month of September, however, at just 9,213 new loans, this figure is well below the recent peak in first home buyers which occurred in January 2021 when 16,298 loans were settled.
Number and value of new owner-occupier first home buyer loans in September
| Amount | Monthly change | Year-on-year change | |
| Number of new loans | 9,213 | 50 0.5% | -59 -0.6% |
| Value of new loans | $4.64 billion | $62 million 1.4% | $139 million 3.1% |
Source: ABS Lending Indicators Sept 2023, released 2 Nov 2023, seasonally adjusted data.
Source: ABS Lending Indicators, seasonally adjusted data.
Borrowers opting for fixed rates drops to lowest level in almost a year
The proportion of new and refinanced loans opting for a fixed rate dropped for the second month in a row, down to 4 per cent in September 2023 – the lowest proportion since October 2022.
It is also dramatically down from the peak of fixing in July 2021 which was 46 per cent.
Value of new loans: fixed vs variable
Source: ABS Lending Indicators, original data.
RateCity.com.au research director, Sally Tindall, said: “Refinancing has plummeted to its lowest level in almost a year on the back of a mass exodus by lenders away from cashback incentives.”
“The drop in both refinancing and cashback deals is not a coincidence. It’s proof the cashback carrot was an effective motivator to encourage borrowers to switch,” she said.
“In March, there were 35 lenders offering cashback incentives driving existing borrowers to refinance. Today, there are just 14, with the majority of cashback offers scrapped after CBA pulled the pin in May.
“The only thing more likely to motivate a customer to refinance than $4,000 in cold hard cash, is the threat of that deal coming to an end. That’s why we saw refinancing hit a record high in July, as the rush of last-minute refinance applications from CBA, Westpac and NAB were settled.
“Borrowers who haven’t yet managed to refinance their loan haven’t missed the boat.
“There are still plenty of smaller lenders offering competitive rates, some of which still include an upfront cash sweetener.
“The value of new investor loans has been broadly increasing for the majority of this year, with the September figures recording the highest value since August 2022.
“Investors were largely in retreat at the start of the year, but have been steadily coming back into the market in recent months, bolstered by both strong growth in property price rises and rental returns,” she said.
Source: RateCity.com.au
List of lenders still offering home loan cashback deals at March 1 2023 vs today
| Max cashback | ||
| Lender | 1-Mar-23 | Today |
| AMP | $4,000 | GONE |
| ANZ | $4,000 | $2,000 |
| Bank of China | $3,000 | $4,000 |
| Bank of Melbourne | $4,000 | $2,000 |
| Bank of Queensland | $3,000 | $2,000 |
| BankSA | $4,000 | $2,000 |
| BankVic | $4,000 | GONE |
| Bankwest | $3,000 | GONE |
| bcu | $4,000 | GONE |
| CBA | $2,000 | GONE |
| Credit Union SA | $2,500 | GONE |
| Defence Bank | $4,000 | $4,000 |
| Geelong Bank | $2,000 | GONE |
| Great Southern Bank | $3,000 | GONE |
| Greater Bank | $4,000 | GONE |
| Heritage Bank | $4,000 | GONE |
| HSBC | $3,288 | GONE |
| imb bank | $3,000 | $2,500 |
| ING | $3,000 | GONE |
| LCU | $1,500 | GONE |
| Loans.com.au* | N/A | $4,000 |
| ME Bank | $4,000 | $3,000 |
| MyState Bank | $3,000 | GONE |
| NAB | $2,000 | GONE |
| Newcastle Permanent | $3,000 | $2,000 |
| People's Choice | $4,000 | GONE |
| RACQ | $2,000 | $2,000 |
| RAMS | $4,000 | $3,000 |
| Reduce Home Loans | $10,000 | $10,000 |
| Regional Australia Bank | $2,000 | GONE |
| St. George Bank | $4,000 | $2,000 |
| Summerland Credit Union | $3,000 | GONE |
| Suncorp Bank | $4,000 | GONE |
| ubank | $5,000 | GONE |
| Westpac | $3,500 | GONE |
| P&N Bank | $2,000 | GONE |
Source: RateCity.com.au. *Note: loans.com.au cashback offer only available through comparison websites. Defence Bank offer exclusive to defence force members.
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