This article is from the Australian Property Journal archive
THE surge in refinancing driven by low-interest fixed-rate loans has wound down in FY24, as new loan volumes rose by 6.0%.
According to PEXA Group’s latest Mortgage Insights Report, refinancing activity has dropped off from its peak with the market now adjusted to the high volume of fixed-rate fixed-term loans taken out two to three years back.
Refinancing activity fell by 11.9% over FY24, with 396,653 refinances completed for loans valued at $211.2 billion, or a drop of 0.8% in aggregate value.
Victoria recorded the highest volume of refinances over the quarter at 125,082, followed by NSW at 120,679.
FY24 saw a 6.0% boost in new property-related loans from Fy23 to 509,955, led by Victoria.
Victoria saw the greatest demand for property loans with 136,461 new loans over the year, even as both Queensland and New South Wales saw more transactions settled over the same period.
NSW followed Victoria, recording 129,729 new loans over the quarter, just pulling in ahead of Queensland at 129,719.
“Rising interest rates and stagnant incomes posed challenges for many home buyers and borrowers in the first half of FY24. But as we moved through the year, resilience in the labour market and greater stability in interest rates helped to boost buyer confidence,” said Julie Toth, chief economist at PEXA Group.
“When we look at the differences in loan activity across locations, FY24 saw an unusually high volume of new loans in Victoria. Anecdotal evidence suggests this may be related to an exodus of property investors responding to rising state taxes and residential tenancy regulation changes, and a rising proportion of owner-occupier buyers, who are more likely to require a new loan to finance their purchase.”
New loans saw a surge of 25.1% over the June 2024 quarter, with 141,872 new loans, concentrated largely in NSW and Victoria with increases of 35.8% and 26.1% respectively.
This came after a weak March quarter, due to earlier than usual Easter holidays delaying settlements to April. With this April’s new loans volumes up 32.3% on last year.
The June quarter also saw an uptick in refinancing volumes compared to the March quarter.
“Looking ahead, FY25 is expected to see improvements in household confidence, consumption and investment, supported by income tax cuts, receding inflation, and real income recovery. As the property market adjusts to these changes, ongoing growth in loan and refinancing volumes is anticipated,” added Toth.
