Refinancing sees 6.15% increase in October: Joust

According to the data from Joust’s Live Auction service, there has been a 6.15 per cent rise in the size of loans accessed in its ‘refinance’ category across Australia in the month of October 2022, increasing from $508,838 (the same period in 2021) to $540,149.

The data found that South Australia saw the biggest increase in loan sizes for refinancing, where it rose 40.7 per cent for the month of October 2022, when compared to the month in 2021. Following this was ACT with a rise of 20.82 per cent and NSW with an increase of 13 per cent.

However, loan sizes for the purpose of refinancing dropped slightly in Victoria and Queensland by 1.12 per cent and 7.20 per cent, respectively.

Meanwhile, home owners are also taking out smaller loans to buy homes. Joust’s data indicated that loan sizes for the purpose of buying and building fell during the same period.

A 16.97 per cent drop was seen in the size of home loans accessed by the online marketplace’s ‘buy’ category, decreasing from $725,586 to $602,430 along with an 11.17 per cent decline in loan sizes in the ‘build’ category, from $767,243 to $681,538.

According to Joust, the desire to refinance loans follows the 7.3 per cent increase in the Australian Bureau of Statistics (ABS) consumer price index during the September quarter of 2022.

CoreLogic data for October further revealed a 3.1 per cent year-on-year decline in national home values in the capital cities market as well as a decrease in sales volumes (9.3 per cent) across the country in the 12 months to October when compared to 2021.

Furthermore, recent Equifax data revealed that there has been a steady increase in home loan refinancing since April 2022 and showed that 69 per cent of mortgagors were concerned about not making repayments due to rising rates.

Joust chief executive, Carl Hammerschmidt, stated there are now “clear signs” that borrowers were initially not prepared for the rapid rate hikes seen in 2022.

“The increase in people across most states looking to refinance larger home loans shows that those who got into the market during record low interest rates are now finding themselves over-extended,” Mr Hammerschmidt said.

“So while loan sizes for the purpose of buying and building fall, we’ve seen people with larger loans looking on Joust for a better deal as not only mortgage repayments spike, but so do things like groceries, petrols and other day-to-day expenses.”

He added that these trends are expected to be ongoing as we go into the new year and that mortgagors should know that “it’s not too late to find a better deal”.

“The positive side of rising rates is that lenders are being forced to compete for not only new business but to keep existing business as well, it’s important to look at your refinancing options as soon as you can,” Mr Hammerschmidt concluded.

[RELATED: Refinancing ‘surge’ on 37%+ of all home loans: Equifax]

Written by Adrian Suljanovic

Last Updated: 06 December 2022

Published: 07 December 2022