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A report has revealed an increase in new loans issued over the last 12 months as refinancing volumes continue to dwindle.
The latest Mortgage Insights report released by PEXA revealed that a total of 509,955 new loans were issued in the financial year 2024, showing an increase of 6 per cent when compared to the previous financial year.
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According to PEXA, national demand for property loans was led by Victoria over the financial year with the highest volume of new loans at 136,461, although more property transactions were settled in NSW and Queensland during this period.
Additionally, the volume of new loans issued saw a substantial rise of 25.1 per cent (141,872 loans) in the June quarter 2024 when compared to the previous quarter.
The quarterly increase was driven by NSW and Victoria, which recorded increases to new loan volumes of 35.8 per cent and 23.8 per cent, respectively, on a quarterly basis.
The growth can be attributed to a “weaker than usual” March quarter due to the earlier Easter holidays falling in the month of March, according to PEXA, which resulted in buyers likely delaying settlements until April.
As such, April’s new loan volumes were 32.2 per cent higher compared to the same time in 2023.
Meanwhile, refinancing activity recorded an 11.9 per cent drop with 396,653 refinances completed in FY24 valued at $211.2 billion (down 0.8 per cent in aggregate value over the year).
The report suggested that this signified the end of the refinancing peak that occurred in FY23 during a time when an unusually large number of fixed-rate loans expired.
Commenting on the data, PEXA’s chief economist Julie Toth said the increase in new loans and decrease in refinancing activity signals a “shift in property market dynamics” as we move on from pandemic disruptions and rapid interest rate adjustments.
“Rising interest rates and stagnant incomes posed challenges for many home buyers and borrowers in the first half of FY24. But as we moved through the year, resilience in the labour market and greater stability in interest rates helped to boost buyer confidence,” Toth said.
“When we look at the differences in loan activity across locations, FY24 saw an unusually high volume of new loans in Victoria.
“Anecdotal evidence suggests this may be related to an exodus of property investors responding to rising state taxes and residential tenancy regulation changes, and a rising proportion of owner-occupier buyers, who are more likely to require a new loan to finance their purchase.”
For the outlook of FY25, Toth speculated that there would be improvements in household confidence, consumption and investment supported by tax cuts, easing inflation, and real income recovery.
“As the property market adjusts to these changes, ongoing growth in loan and refinancing volumes is anticipated,” she said.
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