Rate hikes fuel surge in home loan refinancing activity
Hanan Dervisevic | Apr 03, 2023 16:08
ABS lending indicator data released Monday revealed the value of new home loan commitments fell 0.9% in February 2023, with new home loans written in the month amounting to $22.6 billion.
- New home loan lending for owner occupiers fell a modest 0.9% in February, marking the 13th consecutive month of declines.
- Owner occupier refinancing recorded a new high at $13.6 billion as borrowers seek out the best deals in the market.
- New loan commitments to first home buyers declined by 3.5% in February.
This marks the 13th consecutive month of declines.
The value of total new owner-occupier loan commitments fell 1.2% to $15 billion, while new investor loan commitments fell 0.5% to $7.6 billion.
“Housing finance continued to decline from the record highs in January 2022, with the total value of new loan commitments falling 33 per cent since then,” said Dane Mead, ABS Head of Finance and Wealth.
The average loan size for owner occupiers decreased from last month, now at $586,000.
However, this remains 22% higher compared to the pre-pandemic average seen in February 2020.
Refinancing continues to remain front of mind for many Aussie mortgage holders, with the value of owner-occupier housing loan refinancing increasing by 3.5% in February.
This led to a new record high of $13.6 billion.
The RBA’s consecutive cash rate rises have prompted borrowers to switch lenders in a bid to find competitive interest rates and cashback incentives.
The total value of refinancing (including owner-occupied and investor) has nearly doubled since the last rate cut in November 2020 when external refinancing sat at $10.3 billion compared to $19.8 billion in February 2023.
Major bank Westpac was just off the mark in its prediction, tipping a -1.0% decline while ANZ anticipated a -5.0% decline.
First home buyer loans fell 3.5% to 7,022 in February.
“Owner-occupier first home buyer lending continued to decline from the high reached in January 2021, to the lowest level seen since May 2017,” Mr Mead said.
“It was also 27% lower than February 2020, prior to the COVID-19 pandemic.”
State by state, the number of first home buyers in February fell:
- Victoria -2.7%
- Queensland -0.5%
- Western Australia -7.3%
- Tasmania -2.2%
- South Australia -4.9%
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Meanwhile, New South Wales, the ACT, and Northern Territory all recorded increases of 5.9%, 14.9%, and 3% respectively.
More to come…
"Rate hikes fuel surge in home loan refinancing activity " was originally published on Savings.com.au and was republished with permission.
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