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By Michael Yardney

Australia’s owner-occupier refinancing hits a record high

key takeaways

Key takeaways

New lending was up 1.7% month-on-month but is likely to drop in the coming months as the property market cools.

The total value of refinancing was the second-highest on record, with owner-occupier refinancing at a record high.

Average new loan size decreased in NSW, SA, WA, Tasmania and the Northern Territory, however, nationally it went up slightly.

First home buyer numbers increased by 2.3% month-on-month but decreased 31.6% from the same time a year ago.

Housing loan approvals rebounded in May, but new borrowers have turned their backs on fixed-rate home loans, according to the latest ABS lending data.

The proportion of fixed loans funded in the month of May was just 12 per cent, in seasonally adjusted terms, and comes as banks rapidly hike fixed rates.

This includes both new loans and refinancing.

At the peak in July 2021, 46 per cent of all new loans were fixed.

Fixed Rate Loan Approvals


Sally Tindall, Research Director of said:

“Australia’s brief love affair with fixing is over, with the ultra-low COVID rates now long gone.

With the majority of big four bank fixed rates now starting with a ‘5’ or a ‘6’, borrowers are returning to variable home loans."

The total value of new home lending rose in May but is likely to drop in the coming months

Housing loan approvals are clearly off their recent highs and are likely to continue to turn lower as deteriorating housing market sentiment and higher rates bite on loan demand, but there is no sharp rollover yet apparent in the data to May.

Owner occupier loan commitments peaked in May last year, and are now 9.7% lower, though have flattened out in recent months. Investor approvals had continued to grow over the past year, but look to have peaked in March, now 4% off their recent highs.

The investor share of new loans has recovered from a 2020 low of 23.1% to around its longer run average and stood at 34.5% in May.

Loan Approvals May 2022

Loan Approvals House Prices

Sally Tindall said:

“The value of new home loans will likely drop as the property market cools, with the weekend’s clearance rates at just 55 per cent across the combined capitals, according to CoreLogic.”

Many Australians who were looking to buy have now pressed pause, waiting for prices to drop further before jumping in."

Value of new home loans approved in May

Value Of New Home Loans Approved In May

The number of first home buyers rises in May

The number of owner-occupier first home buyer loans increased by 2.3 per cent month-on-month in May.

However, year-on-year, the numbers have dropped by almost 32 per cent, with 4,708 fewer first home buyers in May 2022 than in May 2021.

Ms Tindall commented:

“With 35,000 new places in the federal government’s First Home Guarantee scheme now open, we could see first home buyer numbers increase.

However, young Australians buying with wafer-thin deposits need to be aware of the risks and make sure they are prepared for their repayments to continue to climb as the RBA keeps hiking."

Owner Occupier First Home Buyers In May

Refinancing soars as borrowers try to combat rising rates

The total value of refinancing rose by 3.1 per cent in May, with owner-occupier refinancing hitting a record high.

Ms Tindall further commented:

“There has been a surge in borrowers refinancing their home loans, locking in a lower rate to combat the RBA rate hikes.”

While across the board variable rates are rising, many banks are offering sharper rates and big cashback for customers willing to refinance."

Refinancing Soars

Total Value Of Loans Refinanced

Average new loan size drops in 5 states as the property market cools

While the national average new loan size for owner-occupier dwellings rose slightly in May, it has fallen in five states: NSW, SA, WA, Tasmania and the Northern Territory.

In NSW, the average new mortgage size dropped by $5,273 in May but is still $68,868 higher than a year ago.

Average new owner-occupier loan size: May

Average New Owner Occupier Loan Size May

About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.
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