Mortgage Insights | Refinancing activity slowed considerably in the Mar-24 Qtr

• In volume terms, a total of 113,336 new loans were issued in the Mar-24 Qtr, which was an improvement of 8.9% from the same period in the previous year, but down 17.1% from the Dec-23 Qtr. 
• QLD ranked number one in the nation, with 29,831 residential new loans. VIC and NSW came in second and third with 28,372 and 27,150 new loans respectively. 
• A total of 81,614 refinances were completed in the Mar-24 Qtr. Refinancing activity has slowed considerably from its Sep-23 Qtr peak and fell both on a quarter-on-quarter and year-on-year basis in all mainland states.

Similar to the performance of sale settlement volumes in the Mar-24 Qtr, both new loan and refinance volumes also experienced a seasonal decline, compounded by a higher than normal number of public holidays at the end of March, due to the early Easter holidays. 

• New loan volumes and values continued to track closely to property sales. New loan activity slowed during 2023 as interest rates rose rapidly and the property market cooled, but very strong underlying demand for homes and for home loans saw the market resume its upward trajectory relatively quickly, despite higher rates and tighter credit conditions.  
• Australia’s cash rate rose to a recent high of 4.35% in November 2023 but it has since remained stable. If interest rates remain stable over the remainder of 2024, then the number of new mortgages is very likely to continue to nudge higher, relative to 2023. 
• Refinancing activity continued to follow trends in new loan volumes, with an approximate time lag of 24 to 30 months. The Reserve Bank of Australia (RBA) indicated that over 800,000 fixed-rate loans were taken out in 2020-21, with half having expired before June 2023 and the rest due to expire by June 2024. This unprecedented wave of fixed-rate mortgages has almost run its course, with mortgage defaults and arrears rates ticking up only slightly from historic lows. 
• Variable-rate mortgagees sought out cheaper loans and better deals in 2023, as interest rates rose. Stable interest rates since November 2023 have reduced the sense of urgency among existing mortgagees, likely contributing to the fall in refinancing activity levels during the Mar-24 Qtr.

• Volume of new loans: 113,336 
• Nationally, a total of 113,336 new loans were taken out in the Mar-24 Qtr, up 8.9% from the previous year, but a decline of 17.1% from the previous quarter. 

• Volume of residential new loans: 108,751 
• QLD ranked number one in the nation, with 29,831 residential new loans. VIC and NSW came in second and third with 28,372 and 27,150 new loans respectively. 
• WA recorded the smallest decline compared to the Dec-23 Qtr (-5.8%) and the biggest improvement compared to the Mar-23 Qtr (+14.1%). 

• Volume of commercial new loans: 3,474 
• Commercial lending fell similarly across the three states compared to the Dec-23 Qtr. 

• Residential median loan values rose across the eastern states, driven by the capital cities in VIC and QLD. 
• Median loan values in QLD have markedly increased over the last year, by 13.5% to $554,915 in Greater Brisbane and by 8.9% to $448,510 in regional QLD. 
• Since the previous quarter, growth in median loan values in regional NSW (+5.4%) outstripped Greater Sydney, which remained relatively flat (+0.5%). 

• Volume of refinances: 81,614 
• VIC remained the state with the highest volume of refinances, with 24,953 recorded in the Mar-24 Qtr. However, refinance volumes in VIC are also contracting the sharpest, down 29.0% relative to the prior quarter and down 20.2% from the prior year.

• A total of $45.0 billion of property was refinanced nationally in the Mar-24 Qtr.  
• NSW had the highest value of any other state with $17.4 billion, reflecting higher property prices and loan values. 
• The value of loans refinanced in the Mar-24 Qtr fell sharply by 15.9%, in line with the decline in refinancing volumes. 

Notes: 

This report provides the latest mortgage trends for the mainland states of NSW, VIC, QLD, WA and SA including new loans arising for the purchase of a property and property refinances. Loan figures quoted include all residential and commercial properties unless otherwise stated. Any non-monetary settlements such as family transfers or gifts have been excluded.  

In this report, property settlements that are funded with a loan are defined as a ‘new loan’, regardless of whether a new or existing loan facility is used. Refinances include the refinancing of loans with a different lender. They exclude internal refinancing of a loans with the same lender. 

For further enquiries about this report or PEXA data, please contact us at research@pexa.com.au. 

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