PEXA data reveals drop in loan values over CY23

Digital property exchange platform PEXA’s latest Mortgage Insights Report for the calendar year 2023 has revealed median loan values fell in NSW and Victoria for the first time since the COVID-19 pandemic.

The report found that median loan values in NSW fell to $647,576, while median loan values in Victoria fell to $497,167 over 2023.

However, Queensland recorded an increase in its median loan value to $464,527 over the 2023 calendar year. According to PEXA, this came as the state recorded the highest volume of sale settlements of any state during the year, which has indicated continued strength in demand in Queensland.

PEXA’s head of research, Mike Gill, said the declines in median loan values across NSW and Victoria have indicated a “slight improvement in buyer affordability, with Aussie buyers now setting their sights on borrowing smaller amounts to fuel their property purchases”.

Overall, the report found that Australians borrowed $300.9 billion to fund property purchases over 2023, with the total value of new loans dropping by 12.7 per cent on 2022, which has reflected the effects of the Reserve Bank of Australia’s (RBA) 13 interest rate hikes along with cost-of-living pressures on property markets.

A total of 461,979 new loans were issued nationally by Australian lenders to fund property purchases, and 452,025 existing loans were refinanced.

Refinancing activity over the year increased by 11.4 per cent, reaching a total value of $220.4 billion, the report found.

Meanwhile, new lending fell in all mainland states over 2023, the largest declines being recorded in NSW and Victoria, falling to $109.5 billion and $84.1 billion, respectively.

“While all Australian mainland states experienced significant growth in refinancing volumes during 2023, there was a notable decline in the final quarter of the year,” Mr Gill said.

“This late decline suggests that Australian refinancing activity may have peaked, in response to the strong upswing in the interest rate cycle in 2023 and in line with the surge in fixed-rate loans in the preceding two to three years.”

He continued: “The Reserve Bank raised official interest rates by 0.25 per cent to 4.35 per cent in November of 2023, after pausing for the prior three months.

“Typically, rate hikes spur refinancing activity as home owners seek better options for their home loans. However, the timing of this rate increase, so close to the end of the year, may have hindered many home owners from taking action before the Christmas break.”

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