Borrowers are not sitting idly as their mortgage rates rise. Refinancing rates have been high over the past few months and hit a record in June.
Australian Bureau of Statistics lending data show external refinancing hit A$18.2 billion – the highest level in the ABS dataset. Refinancing rates have been running at $15 billion to $17 billion since the start of the year, well above the levels of previous years.
According to PEXA’s latest Mortgage Insights Report, there were 331,000 refinances in the year to June, with growth concentrated in the eastern states.
Refinancing was up 49.8 per cent in Queensland, 25.8 per cent in New South Wales and 23.7 per cent in Victoria.
PEXA said the high numbers were on top of already high volumes in 2020/21, when record low rates prompted borrowers to look for cheaper deals.
PEXA said the major banks suffered a net decrease in mortgage refinances through 2021/22, while smaller lenders had a net increase.
The boom in refinancing has prompted lenders to offer discounted rates to refinancers.
Commonwealth Bank’s standard variable home loan package rate is 5.1 per cent. In May it launched a digital home loan, Unloan, which is currently available to borrowers refinancing and has a variable rate of 3.14 per cent.
Credit bureau Equifax has also picked up on the trend. The company’s executive general manager, product, marketing and sales, Moses Samaha, said: “Mortgage demand fell in the June quarter and we expect demand will keep adjusting downwards from 2021 level, which were buoyed by historically low interest rates, as the recent rate rises and the increasing cost of living start to chip away at household savings.
“We’re also seeing refinancing trending upwards, as mortgage holders try to mitigate the impacts of rising rates.”