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Refinancing volumes rose by more than 12 per cent in the latest quarter, driven by renewed competition for mortgages.
Another 25-bp cut by the Reserve Bank of Australia (RBA) is expected to “reignite competition” for mortgages and further boost already rising refinancing activity, according to online settlements provider PEXA.
Refinancing activity in Australia’s five mainland states, which had slowed in 2024, strongly picked up in the March 2025 quarter with more than 90,000 refinances settled, up 12.5 per cent year over year.
PEXA research also found that almost 120,000 new loans were settled in the March quarter, 4.4 per cent higher than the same period a year earlier.
A total of $80.2 billion in new loans, of which $73.5 billion were for residential property, were settled in the quarter, up 7.6 per cent year on year.
Despite some forecasts showing a surge in future refinancing, recent AFG data for brokers aggregating under AFG showed that refinancing activity dipped to its lowest proportion of volumes on record (20 per cent), as the prospect of future interest rate cuts caused potential refinancers to delay plans.
Rate cut to trigger ‘mortgage wars’
The uptick in refinancing and new loans took place in the same quarter as a long-awaited cash rate cut, after the RBA lowered the rate by 25 bps from 4.35 per cent to 4.10 per cent in February.
The central bank is widely expected to lower interest rates when it next meets in May.
PEXA said that a further 25-bp rate decrease next month would reignite “mortgage wars” as lenders compete to offer the best rates.
The property exchange said that although it may be too early to see the impact of a cash rate cut on new loan volumes, refinancing volumes are quicker to respond.
Many lenders have already responded by slashing their fixed-rate loans and some are beginning to offer cashback incentives, PEXA said.
Major banks and several other lenders passed through the full 25-bp rate cut to home loan borrowers although some have been criticised for failing to pass on lower rates.
Qld tops loan volumes
Housing finance for investors has grown faster than for owner-occupiers, according to PEXA.
Over 2024, growth in the volume of new loan commitments for investors peaked in the September 2024 quarter but recorded double-digit growth throughout the year.
By state, growth financing for investors was strongest in Queensland, Western Australia, and South Australia and weakest in Victoria. State trends are expected to continue in the March quarter this year, PEXA said.
Queensland has consistently recorded the highest volume of new loans since mid-2021, while loan values grew the most in Victoria over the March 2025 quarter.
Year-on-year growth in new loan volumes was highest in South Australia, where it rose 8.7 per cent year on year and lowest in Western Australia, where it fell 3.2 per cent from a year earlier.
Refinance volumes have rebounded amid renewed competition for mortgages, with volume growth for the March 2025 quarter strongest in Western Australia (up 27.8 per cent year on year) and weakest in Victoria (up 3.9 per cent year over year).
[Related: Mortgage stress falls to lowest level in almost 2 years]
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