Australia experienced its largest-ever increase in mortgage refinances over the last three years.
In mid 2023, monthly mortgage refinances peaked at $21.5 billion, up from around $10 billion in mid-2020, as reported by the Australian Bureau of Statistics.
However, the boom in mortgage refinancing has clearly come to an end, with the total volume of refinances dropping significantly to $17.3 billion in October:
The transition from ultra-low fixed-rate loans of approximately 2% to variable rates of between 6% and 7% drove a significant number of these borrowers to seek out a better deal with a different lender:
However, the ‘cliff’ of fixed-rate mortgages has mostly passed, as the majority of the cheap pandemic fixed rate mortgages have expired:
This indicates that mortgage refinancing volume will continue to decline in the future.
Nevertheless, a record proportion of Australian households’ incomes is currently being devoted to debt repayments:
This debt burden will increase as last month’s 0.25% rate hike from the RBA feeds into mortgage repayments.
Therefore, despite the conclusion of the fixed rate ‘cliff’, mortgage refinancing activity should remain above average in the coming year; although the boom is now well and truly over.
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