PEXA Refinance Index hits record high

Data insights business Property Exchange Australia’s (PEXA) Refinance Index has revealed a “new record high” in loan refinancing volumes since April 2023, rising by 203.2 points in the week ended 30 July 2023.

The index revealed that refinancing volumes were 4.1 per cent higher than recorded in June 2023 and were up by 19.8 per cent from the same week in 2022.

In addition, refinancing activity was doubled on the lowest periods of April–May 2020 and February–March 2021.

PEXA chief economist Julie Toth said while the data showed new records in national refinancing volumes in this quarter, the index confirmed a recovery in property settlement numbers.

“Monthly property settlement numbers (and in many locations, property sale prices) have been recovering from their recent slump, from around March 2023 onwards,” Ms Toth said.

“The 2023 financial year finished strongly with more than 66,000 property settlements recorded in the month of June – up from 58,000 in May and 48,000 in April – and signalling a rebound in settlement volumes.”

Refinancing down in June but still near record-high levels

Despite the numbers recorded by PEXA, the latest Lending Indicators data released by the Australia Bureau of Statistics (ABS) revealed the value of total housing loan refinancing between lenders fell by 3.1 per cent in June 2023, to a figure of $20.2 billion, compared to the $21 billion recorded in May 2023.

However, this figure still marked a 12.6 per cent increase compared to the same period the previous year.

This lift in refinancing activity was driven by borrowers seeking to switch lenders amid interest rate rises, which have seen a 400-bp increase over the past year.

Both owner-occupied and investor housing experienced declines in refinancing during June.

Owner-occupier housing fell by 2.4 per cent to $13.7 billion, following an 8.6 per cent increase the previous month, while investor refinancing also dropped by 4.5 per cent to $6.4 billion, down from $6.8 billion.

Despite the slowdown in refinance activity, ABS head of finance statistics Mish Tan highlighted that refinance activity has remained at “record highs in recent months.”

The data showed that a total of 30,253 owner-occupier loans were refinanced in June, indicating that activity remains well above historical levels.

While the cash rate has held steady for the month of August, at 4.1 per cent, the overall increase in interest rates has resulted in a surge in refinance activity as mortgage stress begins to rise.

[RELATED: $20bn in home loans refinanced in June: ABS]