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Record number of Aussies refinance as new home lending plummets

Record number of Aussies refinance as new home lending plummets

09 Jul, 2020 - 2 min read

Today’s figures from the ABS show new home lending plunged $2.15 billion in May, the biggest monthly drop ever recorded.

The ABS lending indicator statistics show new home lending dropped by 11.59 per cent, month-on-month, according to the seasonally adjusted data.

Refinancing, however, hit a record high – the number of external refinances increased by 29.19 per cent from April to May, and 63.10 per cent, year-on-year, according to the seasonally adjusted figures.

Value of new loans	% change	% change
Value of new loans	Apr 2020 – May 2020	May 2019 – May 2020
Total housing	-$2.15 billion -11.59%	$290.7 million 1.80%
Owner occupiers	-$1.39 billion -10.16%	$842.3 million 7.34%
Investors	-$758.80 million -15.61%	-$551.60 million -11.86%

Notes: Seasonally adjusted figures. Figures exclude refinancing.

Source: ABS lending indicator statistics for May 2020, released 9 July 2020.

External refinancing	% change	% change
External refinancing	Apr 2020 – May 2020	May 2019 – May 2020
Number	29.19%	63.10%
Value	27.47%	91.61%

Notes: Based on the number and value of new loans to owner occupiers using seasonally adjusted figures.

Source: ABS lending indicator statistics for May 2020, released 10 July 2020.

Looking for a lower rate? Want a loan with more flexibility? Learn more about what you may unlock through refinancing your home loan.

RateCity research director, Sally Tindall, said the drop in home lending was a result of the COVID-19 restrictions in April, as new home loans typically take a number of weeks to settle.

“Today’s figures show just how hard COVID-19 hit the housing market during lockdown,” she said.

“May recorded the biggest monthly drop in the value of new home loans settled, as vendors pulled the pin on listings, and on-site auctions were banned for weeks.

“While we could see a small rise next month in response to a lifting of COVID-19 restrictions, it’s still likely to be a long road ahead for the home lending market.

“Refinancing, however, went through the roof in May, as homeowners looked for quick ways to reduce expenses and get into a better financial position.

“Mortgage holders sick of paying an excessive loyalty tax are capitalising on the record low new customer rates on the market.

“Banks have been inundated with refinance applications, with some unable to keep up with the demand seeing processing times blow-out,” she said.

Disclaimer

This article is over two years old, last updated on July 9, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

Laine Gordon

Money Editor

Laine Gordon is the Money Editor at RateCity and an experienced journalist and research specialist. With a background in news and feature writing, covering finance, media and even food (a passion of hers) at Reed Elsevier publications, Laine brings almost two decades of experience to the team. Having covered major areas of interest to the general public from hip pocket issues to rising and falling interest rates and the impact to mortgages, credit and saving in Australia, she is passionate about researching and telling people’s stories to help others make better decisions about their own finances.