Over the past three years, Australians have undertaken a record volume of mortgage refinances.
This is illustrated in the next chart, which shows that total annual mortgage refinances rose from around $100 billion to $230 billion currently:
Much of the refinancing has been prompted by homeowners having to renegotiate fixed-rate loans established during the pandemic’s record-low borrowing rates.
Electronic conveyancing platform PEXA believes the refinancing boom might be coming to an end.
“We’re seeing green shoots coming through and we are also saying we believe the market has bottomed out”, PEXA chief executive Glenn King told The AFR.
“What we can also say is while refinancing will still be strong, if we’re seeing any improvement in the market, the proportion may not be to the same degree”.
Realistically, refinancing will remain strong until the ‘fixed rate mortgage cliff’ finishes.
According to CBA analysis released last week, $34 billion worth of fixed-rate mortgages expired over the six months to June 2023, with a further $52 billion expiring in the 6 months to December 2023:
Currently, only around two-thirds of the current cash rate increases have been felt by borrowers, according to CBA.
However, by year’s end, around 85% of the RBA’s rate hikes will be felt by borrowers.
