Homeowners rush to refinance their loans

Lenders refinanced a record $19bn in mortgages in August, with homeowners rushing to ­secure a better deal as the RBA pushes borrowing costs up.

New homeloan commitments are down 15 per cent in three months, but refinancing hit a record high in August. Picture: Nigel Hallett

Lenders refinanced a record $19bn in mortgages in August, with homeowners rushing to ­secure a better deal as the RBA pushes borrowing costs up and pandemic-era cheap fixed rates expire.

Refinancing in August was up 5 per cent on a month earlier, and 10 per cent up on a year earlier, the seasonally adjusted data from the Australian Bureau of Statistics showed. Owner-occupiers refinanced loans worth $12.8bn – the most in history – up 3 per cent from July and 18 per cent higher over the year.

Refinancing among investors was $6.1bn – below the peak of $6.3bn in August 2021, but up 10 per cent on a month earlier.

The total value of refinancing activity among households is more than double what it was in August 2019, before the start of the pandemic.

While existing mortgage holders look for a better deal en masse, new housing loan commitments continued their sharp reversal, echoing slumping property values and this year’s sharp Reserve Bank rate rises.

After peaking at a record of more than $33bn in January, monthly new commitments – excluding refinancing – totalled $27.4bn in August. The 3.4 per cent decline in the latest ABS figures extended a 15 per cent decline since May, which coincided with the start of the RBA’s rate moves.

ABS head of finance and wealth Katherine Keenan said “although lending continued to fall from the high levels of June 2022, the value of loan commitments in August remained elevated compared to pre-pandemic levels”.

“Owner-occupier loans in ­August were 36 per cent higher than February 2020, while investor loans were 70 per cent higher,” Ms Keenan said.

The average loan size for owner-occupier dwellings (which includes construction and the purchase of new and existing dwellings) fell in August from $609,000 to $589,000 – still 23 per cent higher than in February 2020, the ABS said.

The average loan size fell in every state, bar the two territories.

However, there was a 10 per cent jump in August in the number of new loan commitments by first-home buyers to 9260.

That was the biggest increase since August 2020, but still well below the January high of 16,330.

“Anecdotal feedback attributed some of the August owner-­occupier first homebuyer in­creased demand to the 2022-23 First Home Guarantee,” Ms Keenan said.