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Refinancing hits new record high: ABS

The value of owner-occupier refinances set a new record high in August, after $18.8 billion of mortgages were moved across lenders, according to new data.

The Australian Bureau of Statistics (ABS), has revealed that refinance activity set a new record in August 2022.

In seasonally adjusted terms, the value of external refinancing in August 2022 totalled $18.8 billion — up 5.3 per cent on July 2022 and 9.8 per cent higher compared to a year ago.

Owner-occupier mortgages led the charge, after nearly $13 billion of owner-occupier mortgages were refinanced. This was up 2.8 per cent on July 2022 figures and is 17.5 per cent higher when compared to August 2021.

Investor loan refinances also rose, hitching up 10.9 per cent on July figures to $6.1 billion, but were 3.5 per cent lower compared to a year ago. 

The ABS noted that refinance activity continues to escalate as “borrowers continued to seek loans with lower interest rates amid an increase in the RBA cash rate in August”.

FHB activity strengthens

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As well as finding record levels of refinancing, the ABS also found that first home buyer activity was increasing again.

The number of new loan commitments to owner-occupier first home buyers rose 10.4 per cent in August 2022 to 9,258. This was the largest rise since August 2020 — but remains below the January 2021 high of 16,330.

Increased demand was seen across almost all states and territories, particularly in Victoria (up 11.9 per cent), Queensland (up 14.3 per cent) and Western Australia (up 13.9 per cent). Only South Australia saw a drop in first home buyer commitments in August, falling 1.4 per cent on July figures (seasonally adjusted).

Katherine Keenan, head of finance and wealth at the ABS, commented: “Anecdotal feedback attributed some of the August owner-occupier first home buyer increased demand to the 2022–23 First Home Guarantee.”

Business loans were also on the rise, with the value of new loan commitments for business construction up 51.7 per cent on the month prior (making up the lost ground of July 2022, when there was a 35.4 per cent drop), to $2.3 billion. 

Conversely, the value of loans for businesses looking to purchase a property dropped by 23.6 per cent on July figures, falling to $6.3 billion (after a rise of 40.2 per cent in July).

Mortgage values dropping overall

Overall, the value of new loan commitments for all housing is continuing to drop, according to the ABS, but it is still markedly up on pre-pandemic levels.

The value of new loan commitments fell 3.4 per cent to $27.4 billion in August 2022 (on a seasonally adjusted), according to the lending indicators data.

Housing loans continue to drop at the fastest rate across lending segments, falling by 3.4 per cent on July figures (which themselves fell 8.5 per cent on June), with both owner-occupier and investor loan commitments dropping in value.

According to the ABS, a total of $18.5 billion of owner-occupier loans were committed to by the lenders in August, down 2.7 per cent on the previous month. The figure is a 15.1 per cent drop when compared to August 2021 levels (which were at near-record highs).

Investor loans also fell over the month of August 2022, decreasing by 4.8 per cent on July figures and down 6.4 per cent year-on-year. 

A total of $8.85 billion of investor loans were committed in August — which is 69.9 per cent more than pre-pandemic levels (when compared to February 2020). Investor activity was strongest in Tasmania (up 4.1 per cent), followed by Western Australia and the ACT (both up 3 per cent).

Speaking of the figures, Ms Keenan noted: “The value of new owner-occupier loan commitments fell 2.7 per cent in August 2022, and the value of new investor loan commitments fell 4.8 per cent.

“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.”

At the national level, average loan sizes fell in every state, however rose slightly in both territories.

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.

However, this was still 23 per cent higher than those seen in February 2020 (before the pandemic hit). 

Personal finance also recovered — with the value of new loan commitments for fixed-term personal finance rising 9.5 per cent (seasonally adjusted) in August 2022.

This was driven by car loans, which rose 17.7 per cent to $1.7 billion, following a 5.2 per cent rise in July. This marked the highest value for car loans since July 2016.

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