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Refinancers made up a third of mortgages lodged by the aggregator’s broker network.
According to aggregator Australian Finance Group’s (AFG) latest Mortgage Index report, 33 per cent of mortgages lodged by AFG’s network of brokers were refinancers during the last quarter of the financial year 2023 (ended June 2023).
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The proportion of refinancers remained steady at 31 per cent for the second and third quarters of 2023, after it rose from 29 per cent in the first quarter, the index report revealed.
AFG chief executive David Bailey stated this was the highest level the index has observed since the third quarter of 2017, when refinancers accounted for 35 per cent of mortgages lodged.
“These customers are also historically more likely to use a non-major lender, with market share for the non-majors among refinancers [sitting] at 40.7 per cent for the quarter,” Mr Bailey added.
In total, AFG brokers lodged over $22.4 billion in mortgages (37,270 loans) during 4Q23, recovering from three consecutive declines in lodgements since 1Q23, having dropped from $21.5 billion to $20 billion in 2Q23 and $19.4 billion in 3Q23.
The recovery represented an increase of 15.6 per cent on the prior quarter.
Moreover, the latest Lending Indicators data published by the Australian Bureau of Statistics (ABS) revealed that the number and value of owner-occupier refinances hit a new record high in May 2023.
A total of 30,807 owner-occupier loans were refinanced during the month, marking the first time that more than 30,000 loans have been refinanced in any given month, with the value of external refinancing for owner-occupier housing also reaching new highs, rising by 8.6 per cent to $14.1 billion.
Total housing refinances were up 8.1 per cent to just over $21 billion – 22.4 per cent higher than the same period in 2022.
Banks adjust buffers
With serviceability constraints hampering refinance activity, major banks have begun introducing reduced buffers for refinancers to help them save money.
NAB, CBA, and Westpac introduced these exceptions for “like-for-like” refinancers with a good credit history, a loan-to-value ratio under 80 per cent, those who make principal and interest payments, and those who refinance no more than their current outstanding loan amount.
ANZ remains the only major bank to not introduce these altered serviceability buffers, which not only backed APRA’s 3 per cent buffer, but stated that reduced serviceability buffers would not have “materially helped” its customer base.
Refinancing activity has been at record levels across the mortgage market.
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