New data reveals that in August, fewer people refinanced their loans compared to the previous month, but it was still the fourth-highest number since rates started going up.
This dip was expected because many people rushed to refinance before some banks ended their cashback offers.
Since rates began rising, borrowers have refinanced loans worth almost $309.17 billion to save money.
Total value of refinancing – August 2023
|Aug-23||Monthly change||Year-on-year change||Total since start of hikes|
|(May 22 – June 23)|
|$20.58 billion||-$831 million
RateCity.com.au research director, Sally Tindall, said:
“Refinancing might have dropped, but it is nowhere near game over.
The latest ABS figures show over $20 billion worth of home loans refinanced in the month of August, which is the fourth highest on record.
While some of Australia’s biggest banks have turned their backs on the cutthroat refinancing market, there are plenty of smaller lenders offering competitive rates, and in some cases, cashback in a bid to tempt more borrowers to."
The new figures reveal that in August, people buying homes to live in were approved for more than $16.07 billion in loans, which is 2.6% higher than the previous month.
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This is a positive change after two months of decreases.
Investors also increased their loan approvals by 1.6%.
However, when compared to the same time last year, both people buying homes to live in and investors have seen a decrease in loan approvals.
Value of new home loans approved in August
|Value||Monthly change||Year-on-year change|
|TOTAL||$24.82 billion||+$543 million||-$2.5 billion|
|Owner-occupier||$16.07 billion||+$407 million||-$2.3 billion|
|Investor||$8.75 billion||+$136 million||-$268 million|
After rising for two months, the percentage of new and refinanced loans with fixed interest rates fell to 8% in August 2023.
This is a significant drop from the high point of 46% in July 2021 when many borrowers chose fixed rates.
This shift probably happened because borrowers were anticipating possible interest rate cuts.
Ms Tindall commented:
“Unsurprisingly, the proportion of new and refinanced loans opting for a fixed rate dropped in August as borrowers opt to stick to variable rates until they get a clearer picture of where the cash rate will settle.
Many borrowers are opting to stay shackle-free on a variable rate for now until they see if and when the forecasted rate hikes materialise.”