New mortgages fall countrywide: PEXA

Property Exchange Australia’s (PEXA) latest Mortgage Insights Report for FY23 has revealed that 481,234 total new loans were taken out during the financial year to fund the purchase of property, a drop of 20.6 per cent on the record high recorded during FY22.

According to the report, this drop reflected a sales market returning to a degree of normality when compared to the previous two years during the COVID-19 pandemic.

All states recorded double-digit drops in new loans, led by NSW with a fall of 24 per cent (117,529 residential loans), followed by Queensland at 21.5 per cent (125,547) and Victoria at 20.9 per cent (124,752).

South Australia and Western Australia recorded declines in both residential and commercial new loans, at 21.5 per cent (32,451) and 11 per cent (64,626), respectively.

Furthermore, median loan amounts for new loans trended downwards during the financial year. Median loans in Sydney fell from $784,000 in FY22 to $739,650 and $582,000 to $556,497 in Melbourne.

In addition, the insights report found that the major banks increased their market share for residential new loans during this period, most prominently in NSW that rose by 3.1 per cent to 67.3 per cent of loans (79,097).

PEXA’s head of research Mike Gill commented on the findings: “New lending activity declined across the board in FY23 which reflects the property market normalising to pre-pandemic levels, after an exceptional boom across all mainland states over the previous two years.”

However, while new loans fell, the volume of refinancing activity rose by 13.8 per cent to 450,177 during FY23.

Western Australia recorded the strongest growth in refinancing activity at 29.5 per cent to 45,965 followed by South Australia at 19.4 per cent to 33,496, Queensland at 17.4 per cent to 85,713, Victoria at 14.7 per cent to 150,592, and NSW at 5.3 per cent to 134,411.

“We’ve seen refinancing figures continue to trend upwards over the past three years with particularly strong increases since the Reserve Bank of Australia (RBA) began to raise interest rates from May 2022,” Mr Gill said.

He added that the boom in refinancing activity was bolstered by the high proportion of borrowers in search of a better deal on their home loans as they began to roll off their low interest, fixed-term loans.

“The lure of attractive incentives offered by many of the major banks over the year to entice borrowers to switch lenders, is clearly working,” Mr Gill said.

PEXA’s Refinance Index 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 indicated 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 with refinancing activity doubling on the lowest periods of April–May 2020 and February–March 2021.

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