Property refinances hit new highs in 2021

The latest data from property settlements platforms reveals a record 363,978 properties were refinanced in 2021 – an increase of 27.9 per cent on 2020 – marking the most recorded property refinances in a single year.

Refinancing volumes peaked in the lead-up to Christmas, with PEXA’s index hitting a record high of 168.3 in the week ended 17 October 2021 (seasonally adjusted).

Head of research Mike Gill said the increased speculation in the market “drove” property owners to refinance, particularly in the second half of the year. 

“The current high volume of refinances is well above historic levels, driven by record low interest rates and the recent market speculation of pending interest rate rises,” Mr Gill said.

The report said the growth in 2021 came on top of a 20.9 per cent increase in refinances (284,684) in 2020, highlighting how the pandemic drove property owners to secure a “better deal” on their home loans. 

Moving into January 2022, refinancing activity has remained high, with PEXA’s refinance index up 50 per cent compared to the same time in the previous year.

Refinances boom across states 

All states experienced double-digit growth in refinances for 2021, with Western Australia increasing 58.5 per cent on 2020 with 29,850 properties refinanced. 

For the third year running Victoria recorded the highest volume of refinances at 125,071 (up 18.6 per cent on the previous year), closely followed by NSW on 121,640 (up 28.5 per cent).

In Queensland, 62,110 properties were refinanced up 36 per cent on the previous year, with South Australia recording 25,307 refinance transactions.

Capital cities dominated the property refinances, particularly outer suburban area with high levels of development.

Meanwhile, the non-major lenders moved to a strong winning position for refinances in the second half of 2021, after a downfall in June 2020.

The growth in refinances for non-majors was seen across all states, except Western Australia where the major banks held a slight lead for refinances at the end of 2021. 

Conversely in December 2021 the major banks moved to their weakest position for refinances in the past two years, after its peak in June 2020.