Mortgage Insights Report | Aussies borrowed less and refinanced more

Australians borrowed $300.9 billion to fund property purchases in the 2023 calendar year, with the aggregate value of new loans declining 12.7% from the previous year, reflecting the impact of interest rate hikes and cost of living pressures, new research released today by PEXA has found. Meanwhile, refinancing activity increased 11.4% as homeowners shopped for a better deal on their mortgages.

PEXA’s latest Mortgage Insights Report, which examines loan activity across the five mainland states of Australia for 2023, found that a total of 461,979 new loans were issued nationally by Australian lenders in 2023 to fund property purchases and a further 452,025 existing loans were refinanced.

View Mortgage Insights Report 2023

Rising interest rates encouraged more Aussies to refinance their existing loan with refinanced loans reaching a total aggregate value of $220.4B (up 11.4% on the prior year).

A total of $613.0B of property was purchased nationally in 2023. While buyers borrowed $300.9B in new lending to fund these purchases, the remaining $312.1B was contributed with cash or other forms of financing (via deposits or outright cash purchases or loans not attached to the property being purchased).

All mainland states saw new lending drop in 2023, with the largest states of NSW and VIC falling to $109.5B and $84.1B respectively. The aggregate value of new lending in QLD and WA held steady or dropped marginally in 2023.

For the first time since the pandemic, median loan values fell, with the Report finding that the median loan value in NSW dropped to $647K, and in VIC the median fell to $497K. However, in QLD the median loan value in 2023 increased to over $464K as the state recorded the highest volume of sale settlements of any state during the year, indicating ongoing strength in demand in QLD.

PEXA’s Head of Research, Mike Gill, said “while all Australian mainland states experienced significant growth in refinancing volumes during 2023, there was a notable decline in the final quarter of the year.

“This late decline suggests that Australian refinancing activity may have peaked, in response to the strong upswing in the interest rate cycle in 2023 and in line with the surge in fixed-rate loans in the preceding two to three years.

“The Reserve Bank raised official interest rates by 0.25% to 4.35% in November of 2023, after pausing for the prior 3 months. Typically, rate hikes spur refinancing activity as homeowners seek better options for their home loans. However, the timing of this rate increase, so close to the end of the year, may have hindered many homeowners from taking action before the Christmas break. 

“We also saw the median loan value fall for the first time since the pandemic in our two largest states. These declines indicated a slight improvement in buyer affordability, with Aussie-buyers now setting their sights on borrowing smaller amounts to fuel their property purchases.

“In the commercial lending space, Australia’s eastern states experienced a notable new loan volumes dip of 13.4% in 2023. The number of new commercial new loans declined substantially in NSW (-20.7%) and VIC (-16.3%). This saw QLD overtake the larger states, with the highest number of new commercial new loans in 2023,” he said.

New Loan Highlights

• NSW recorded the highest value of new loans in 2023. $109.5B was borrowed in the state in 2023, with VIC second with $84.1B.
• Median residential new loan values fell in NSW and VIC for the first time since the pandemic. The median loan value in NSW dropped to $647K, and in VIC the median fell to $497K in 2023. These declines signalled a slight improvement in buyer affordability.
• WA proved to be the most resilient market for new loans. The state recorded 63,059 new loans in 2023, which was only 5.2% down on 2022 and contrasted to the larger declines observed in other states.

Refinance Highlights

• NSW led the nation on a value basis, with $79.6B of mortgages refinanced in the state in 2023. VIC came in close second with $71.9B.
• VIC logged 148,368 refinances in 2023, the most of any state. This was up by 10.0% from 2022 and ahead of NSW with 134,934 refinanced loans.
• WA exhibited the strongest growth in refinances in 2023. The state posted 47,491 refinances, up 20.7% from 2022.

View Mortgage Insights Report 2023

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About PEXA

PEXA is a world-leading ASX-listed digital property exchange platform and property insights solutions business. Since 2014, PEXA has facilitated more than 16 million property settlements through the PEXA Exchange in Australia, with 88% market reach, and in 2022 PEXA launched in the UK. The PEXA Group of companies, including .id (Informed Decisions), Value Australia and Land Insight, delivers digital insights and property solutions that help government, financial institutions, banks and property practitioners to unlock the future value of property.

For more information, please contact:

Kate Prigg – Corporate Affairs Manager, PEXA
E: kate.prigg@pexa.com.au
M: 0497 595 580

Danielle Tricarico – Head of Corporate Affairs, PEXA
E: Danielle.tricarico@pexa.com.au
M: 0403 688 980