Record refinancing numbers appear to have hit a cliff, as the rate of borrowers looking to change lenders experiences a substantial fall.
According to data from PropTrack, the winter months saw as many as 28,000 home owners externally refinancing to another lender, compared to the pre-pandemic average of roughly 15,000 owner-occupiers changing lenders in a given month.
A further 11,000–12,000 investors had also been refinancing, according to Angus Moore, PropTrack senior economist.
But the rush of refinancers seems to be slowing, with September’s figures down 18 per cent for owner-occupiers and 15 per cent for investors from the July height.
The economist said the rush was largely driven by a high volume of fixed-rate mortgagees assessing their options as their stable rate came to an end.
The recent drop tracks with the peak of fixed rate expiries expected in 2023. Just under half of all fixed rate loans that were outstanding at the end of 2022 have now ended and rolled off on to variable rates. That rollover peaked in June, when a little over 6.5 per cent of previously outstanding fixed rate mortgages expired.
“Moving banks and refinancing at that point is attractive both because the roll off acts a salient trigger for people to review their home loan, and many will be rolling off on to variable rates that are higher than they could get by refinancing,” Mr Moore said.
The firm’s data showed that new loan rates are typically lower than continuing rates, so it stands to reason that if a large number of people are assessing their options, many will have chosen to make a move.
But while the peak of the refinancing rush appears to be behind us, Mr Moore said that he expects a slow taper into 2024.
“That slower rate of fixed rate expiries means refinancing activity will probably continue to slow over the remainder of this year and into next.”
“While November and December will still see many home owners rolling off their fixed rates, it isn’t as many as we were seeing in the middle of 2023,” he noted.
“And as we head into 2024, the number of fixed rate expiries will taper off significantly – with most months seeing less than half as many fixed rate expiries as in the middle of this year. That will take some of the heat out of refinancing activity,” Mr Moore said.