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A Queensland broker has said business refinances have bumped up to more than 50 per cent amid economic headwinds.
The quarterly PEXA Mortgage Insights Report has revealed refinances have increased 9 per cent on the previous quarter, bringing the total number of refinances during the September 2022 quarter to a record of 102,669.
The insights report analyses data from Australia’s property refinance activity, along with new loan adoptions for residential and commercial property sectors and loan-to-value ratios for new residential loans.
The latest data from the PEXA Refinance Index has observed that refinance activity sharply rose since recording 134 points in early April 2022, to 179.6 in the week ended 18 September 2022.
Strong increases were seen in all four states on the previous quarter. Victoria recorded the highest volume with 36,982 properties refinanced from July to September, and Western Australia saw the highest growth quarter-on-quarter at 13.5 per cent or 10,577 refinances.
During the same period, NSW had 34,084 completed refinances, followed by Queensland with 21,026 refinances.
According to the report, the non-major banks have held on to their ongoing winning position for attracting refinance customers, particularly in Queensland. Major banks reportedly lost 1,059 more refinances than they won during the September quarter.
Speaking to The Adviser, a Queensland broker stated: “We’ve seen a huge uptick in existing businesses refinancing and referrals coming to us purely for a refinance.
“Our current settlements are at around 51 per cent refinances, which is up from around 35 per cent a few months ago.
“I’d say we have approximately half are new clients coming to us for a more competitive rate or a cash back offer.”
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On the other hand, new loans completed during this quarter dropped 12 per cent on the June 2022 quarter, with the most substantial decline seen in NSW with 30,345 new loans (a decline of 14.4 per cent quarter-on-quarter).
Victoria and Queensland also saw a decline in new loans, with a drop of 12.9 per cent and 10.6 per cent, respectively.
PEXA’s head of research, Mike Gill, said: “We continue to see heightened refinancing activity across the nation as Australians respond to rising interest rates by looking to reduce arguably their greatest expense, their monthly mortgage repayment.
“The record levels of new loans seen throughout 2021 and early 2022 have slowed in the recent quarter, coinciding with a dip in property sale settlement volumes.
“We have also seen a small drop in average loan-to-value ratios across Victoria and New South Wales over the past 12 months, with lenders tightening credit as interest rates rise, and this will ultimately impact the borrowing capacity for some home buyers.”
The rising interest rates have resulted in refinance inquiries on the Reserve Bank of Australia’s (RBA) “rate rise Tuesdays” to spike up 157 per cent compared to all other non-rate rise Tuesdays, according to Lendi Group data.
[RELATED: Rate shock spikes borrower concerns]
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