Refinancing reached all-time high in July: Australia

Borrower refinancing of housing loan commitments between lenders reached an all-time high of $17.2 billion after a rise of 6.0 percent in July 2021 (seasonally adjusted), according to data released today by the Australian Bureau of Statistics (ABS).

ABS head of Finance and Wealth, Katherine Keenan, said: "The value of refinancing between lenders was 60 per cent higher in July 2021 compared to a year ago. This reflected borrowers seeking out lower interest rates, particularly for fixed rate loans, and cashback deals across a large number of major and non-major lenders."

The value of new housing loan commitments, excluding refinancing, rose 0.2 per cent in July 2021 (seasonally adjusted). A rise in investor loan commitments (1.8 per cent) was partially offset by a fall in owner-occupier loan commitments (0.4 per cent). Investor loan commitments have seen an unbroken period of growth since October 2020 and almost doubled in value compared to a year ago.

Across the country, owner-occupier construction lending continued to unwind from the February 2021 all-time high when the HomeBuilder grant was available. Since the peak in February 2021, the value of these commitments has fallen from $4.2 billion to $2.5 billion (42 per cent).

Average loan sizes for owner-occupier dwellings (construction, purchase of new and existing dwellings) have been rising since February 2021, reaching a new high in July, particularly in New South Wales, Victoria and Queensland.

New South Wales recorded the strongest rise of any state or territory with an increase in the value of owner-occupier loan commitments excluding refinancing of 6.6 per cent.

Ms Keenan said: "While New South Wales had COVID-19 lockdown restrictions throughout July, lenders reported that the rise in owner-occupier loan commitments was driven by loan applications from May and June."

In contrast to the rise in New South Wales, the value of owner-occupier loan commitments was weak across most other states. Victoria rose 0.4 per cent, while Queensland fell 6.3 per cent, South Australia fell 8.2 per cent and Western Australia fell 0.7 per cent.

Increases in the value of new loan commitments to investors was strongest in New South Wales (6.1 per cent) and Queensland (9.1 per cent).

The number of new loan commitments to owner-occupier first home buyers fell 6.8 per cent in July 2021, following a 7.8 per cent fall in June. The level of commitments has fallen 20 per cent since January 2021 but remains 20 per cent higher compared to a year ago.

Ms Keenan said: "First home buyer lending fell across all states and territories, with the largest fall seen in Victoria, followed by Queensland and New South Wales. While these falls were still tied to the unwinding of strength in construction lending post-HomeBuilder, the decline in first home buyer loan commitments now appears more widespread."

The value of new loan commitments for fixed term personal finance rose 14.2 per cent in July 2021 (seasonally adjusted), driven primarily by a rise of 93 per cent in lending for personal investment, typically for the purchase of shares and other investment assets. Lending for the purchase of road vehicles rose 2.9 per cent.