Property exchange settlements platform PEXA has launched its refinance index, which has revealed that property refinances hit record highs during August 2021.
Refinances surpassed the previous record set in June 2020 following the Reserve Bank of Australia’s (RBA) double rate cut earlier that year.
While refinance activity has been steadily rising since October 2019, it has now reached unprecedented levels, PEXA said.
The latest refinance volume index was 194.9 points, marking an almost 73.0 point yearly increase and 35.0 point quarterly increase.
More than 95.0 per cent of refinances are completed on the PEXA exchange. The refinance index includes more than 2.5 years of data.
PEXA’s findings are similar to data recently released by the Australian Bureau of Statistics (ABS), which revealed that borrower refinancing of housing loan commitments between lenders rose by 6.0 per cent in July 2021 to a record $17.2 billion.
The index has also provided a state-by-state comparison of refinance levels, which has demonstrated strong refinance levels across the country.
Queensland led the country for refinance growth at 217.9 points, up 71.3 points year-on-year. South Australia followed closely at 206.2 points (up 70.6 points year-on-year), with NSW at 195.5 points (up 50.9 year-on-year), Western Australia at 193.3 points (up 93.3 year-on-year), and Victoria at 164.9 points (up 53.3 year-on-year).
Furthermore, in the 2020-21 financial year, refinance increased by around 10.0 per cent on the previous year to around 300,000 refinances.
Commenting on the trends, PEXA Insights’ head of research Mike Gill said that the yearly trend has demonstrated consumer savviness to attempt to secure the most optimal deal on their loans, and added that he does not believe that this trend would end anytime soon.
Speaking about the drivers of the high refinancing numbers, he said: “Whether it is the forced downtime to reassess finances during COVID-19 related lockdowns, or speculation surrounding a potential interest rate rise as early as late 2022, refinance activity has reached new heights nationally.
“PEXA’s refinance index stood at 187 points for the week ending 29 August 2021, up 46.9 per cent year-on-year.
“We anticipate a dip in property sale transactions as a result of the extended COVID-19 led lockdowns in New South Wales and Victoria, however refinance activity is expected to remain elevated in the near future based on the current trendline.”
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.