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Demand for housing finance has fallen sharply across every state and territory, the latest CoreLogic data has revealed.
According to the latest data from property research group CoreLogic, home loan activity fell nationally by 16.5 per cent month-on-month for the week ending 3 May 2020.
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Home loan demand dropped in every state and territory last week, with Tasmania recording the sharpest decline (39.4 per cent), followed by Victoria (29.3 per cent), NSW (16.9 per cent), South Australia (16.1 per cent), Victoria (13.8 per cent) and Western Australia (12.5 per cent).
This coincided with a sharp reduction in property market transaction activity, with the number of homes taken to auction over the week falling to 413, down from 1,479 in the same week last year.
The lull in market activity comes in response to the economic fallout from the COVID-19 crisis, with rising unemployment and social distancing measures imposed to curb the spread of the virus dampening appetite for housing.
Refinances on the rise
However, while demand for new purchases has slipped, refinancing activity is on the rise.
The latest available data from property research group CoreLogic shows that over 75 per cent of valuations ordered in recent weeks were for the purpose of refinancing.
Following release of the bank’s first half results for the 2020 financial year (1H20), the ANZ CEO told The Adviser that the bank has experienced a surge in refinancing applications over the past six weeks.
“What we’ve seen surprisingly in the last six weeks is a significant uptick in home loan applications coming through to ANZ,” he said.
“Most of them are refinancing, as you can imagine, there are not a lot of new home loan purchases, for obvious reasons.
“But a lot of people, I imagine, are sitting at home thinking, ‘The future’s a little bit more uncertain than it was, we should probably look at where we can save a few dollars here and there’.”
The refinancing rush recently prompted Connective’s executive director, Mark Haron, to encourage brokers to flag the long-term risks of refinancing when dealing with clients.
“Keep in mind that if a client is using refinancing as a way of taking some financial pressure off them, make sure that even though refinancing may reduce their repayments, any change in the loan term (lengthening the loan term) would significantly increase the amount of money they have to pay back in the longer term,” he said.
“It is really important that you outline that to your customers quite clearly so that they understand that.”
[Related: Borrower risks flagged amid refinancing rush]
